Tag: Gordon Brown

The speech made by Gordon Brown, the then Chancellor of the Exchequer, on 15 November 2001.

I am delighted to join you at your annual dinner this evening and to pay tribute not just to the work of British business but to commend you – as individual company directors, executives and managers – on the work you do, the service to our country you give, the difference you make to the economy, to employment and prosperity to all.

The Institute of Directors has always stood for an enterprise economy – a dynamic high productivity, high investment, economy built on a strong entrepreneurial culture. And this evening I want to devote my remarks to how to widen and deepen the enterprise culture in our country – strengthening the stability that is its foundation, the competitive environment that is its essential building block and opportunities for the talents of people- their ideas their skills and their initiatives – that are its driving force – to flourish.

Now I am grateful for the opportunity on the eve of my visit to the IMF, World Bank and G20 meetings in Ottawa to speak to you about the challenges we face in Britain and globally.

The tragedies of September 11th will never be forgotten and there are many here this evening whom I know lost friends and colleagues in the collapse of the twin towers.

I can tell you that in Ottawa Finance Ministers and Bank Governors will match the successful military action against terrorism with agreement on an international action plan to cut off the supply of finance to terrorism.

Those who finance terrorism are as guilty as those who practise it and having in Britain alone frozen and immobilised £70 million of suspect terrorist funds we will ask all 183 member countries to outlaw and seize suspicious transactions which may abet terrorism.

And I can tell you that from Britain we will offer to coordinate a central register for technical assistance to countries implementing anti-terrorist measures. And now that anti-terrorist finance units are being set up in all major financial centres we will offer London as an international clearing house for information exchange on asset tracking.

In times like these that challenge and test us, the essential economic function of government is to maintain the conditions for stability and growth and more than ever this must be done not just nationally but internationally.

And it is a tribute to international cooperation that this challenge to the global economy is being met by a global response – that not only have interest rates been brought down worldwide but the central banks of America, the Euro area and Japan as well as Britain have made clear their willingness to take any necessary further action.

All of us should be heartened by not just the spirit but the letter of the historic agreement reached at Doha, developed and developing countries working together to agree to enter a new round of world trade talks – the so called “Doha development agenda” that will engender among the economies of the world greater confidence in the months ahead.

Oil prices – which have previously risen in times of trouble — have fallen in the last month and we will continue to work with the oil producing countries to ensure steadiness of supply and prices. Where markets have failed, as on airline insurance, governments across Europe and America acted to fill the gap — with a new short-term insurance guarantee.

Because no country can insulate itself from the global economy, with world trade slowing, recession threatening in America as well as Japan, and no-one yet sure about the final impact of the events of September 11th, these are still times that are uncertain, times that test us here in Britain.

I understand people’s worries about the effects on their jobs and livelihoods of a global slowdown which will inevitably impact on Britain’s economic growth. And in the Pre-Budget Report we will do more to recognise the vital contribution of modern manufacturing to exports, innovation and our great regions.

But it is because of the tough decisions we took from 1997 to create monetary and fiscal stability that we are today in a better position to withstand the ups and downs of the economic cycle and the pressures of today.

Over the last four years the message you – and the whole of business – have consistently sent us is: maintain the conditions for long-term stability.

Since we introduced a new monetary and fiscal framework four years ago – with bank independence, a symmetrical inflation target, debt reduction and new fiscal rules – inflation has remained at or near the Government’s target of 2.5 per cent.

Indeed, before bank independence the financial market expectation of inflation 10 years ahead was 4.2 per cent– even when there was a 2.5 target – this year the long-term inflation expectations have been averaging 2.5 per cent – exactly on target.

And interest rates have come down to 4 per cent – the lowest for nearly 40 years – precisely because we have a low inflation economy. And we will continue to back the Bank of England in all the difficult decisions it makes.

Central to our fiscal stability is the tough decisions we took in the first Parliament to cut national debt to sustainable levels. Debt was 44 per cent of national income in 1997 when this Government inherited a £28 billion deficit and we immediately took the difficult decisions to freeze spending, introduce new fiscal rules, make the tax changes that were necessary and so cut the burden of unsustainable debt. And in future years, we will also have the strength to take any difficult decisions where they are necessary.

Today debt is falling towards 30 per cent, in contrast to 41 per cent in America, 49 per cent in France, 51 per cent in Germany and 102 per cent in Italy. Britain’s debt as a share of national income is now the lowest in the G7 and lower than our major European competitors.

These sustainable levels of debt allow us to meet our health, education, and transport commitments, deal with emergencies as they arise and at all times maintain and hold both our fiscal rules.

Both you and I want a culture that entrenches low inflation and fiscal discipline – not just for a year or two but also over the long term. So even when tested by events and pressures for spending here and there, the resolve you asked us to demonstrate in 1997 will be maintained. We will not bow to short-term pressures or the old quick fix solutions – we will not abandon the inflation target, relax our fiscal discipline or put our hard won stability at risk but will stay the course.

And we will not change our European policy either: in principle our support for the single currency, in practice the five economic tests that have to be met.

Stability is the foundation but productivity achieved from that platform of stability is – as you know – the key to our future prosperity. And the central economic theme of our Pre-Budget Report will be our support for enterprise – for building a stronger, more dynamic, enterprise economy.

In the past, politicians – indeed both my predecessors and I – have been accused of saying one thing to one audience and another thing to another. So I want to share with you today the agenda for modernisation that I have put to both the Labour Party and the TUC. I am not saying to you what I have not already said to them.

I told them that we must never again be seen as anti-success, anti-competition, anti-profit, and anti-markets.

I said that the new information age economy would need not less but more competition, and not less but more entrepreneurship and flexibility.

It is undeniable that for fifty years after 1945 the British economy and Britain suffered from backward looking and self-defeating conflicts between capital and labour, between state and market, and between public and private sectors – denying Britain a shared national economic purpose.

I believe Britain and the British people have moved beyond these outdated divisions.

As we have entered a new century we have been leaving behind the old disputes and I am optimistic that together – directors, managers and workforce, public and private sectors – we are defining for our times a shared national economic purpose for Britain.

And my reasons for optimism are these:

First, there is now public support from the board room to the shop floor for our framework for monetary and fiscal stability that together we have to build and sustain – even when it means making unpopular decisions;

Second, the work ethic – so important to success in the years of the first British industrial revolution – is being once more re-invigorated in high unemployment communities where it had in recent decades withered – thanks not least to the contribution your companies are making to the New Deal;

And third, perhaps of even more long term importance, we are rediscovering our essential strengths as a nation: our inventiveness and flexibility; our internationalism and openness to the world; our willingness to adapt to change; and our belief in self-improvement and the importance of education.

These historic strengths, which represent some of the proudest parts of our heritage, can contribute most to a successful future and are reflected in:

British initiatives in trade and development designed to advance our national goals of free trade and open markets;
a new emphasis on science and innovation to release the creativity and inventiveness of the British people, not least in knowledge based industries; and

putting education in our schools first to reassert the importance of learning, to raise standards at all levels and to allow young people to develop the talents necessary for high productivity growth.

So how can we build on this in the Pre-Budget Report and beyond?

Our aim for this decade should be to achieve the fastest rise in productivity of competitor countries. Indeed, in a period where the world is slowing down it is the high productivity performers that will gain the most. And beyond our responsibilities for stability, the modern, more focussed, role of government is to:

ensure there is a competitive environment throughout the economy so the companies that are the most innovative and dynamic can flourish; and maximise educational employment and economic opportunities so people can make the most of their talents, ideas and initiatives
Thus creating a wider and deeper enterprise culture that promotes investment and entrepreneurship and rewards success. And I can say tonight that our budget tax decisions will promote these goals and help build an economy that is not only enterprising but where enterprise is open to all.

Having already cut corporation tax for companies from 33 to 30 pence – the lowest rate in the history of British corporation tax and now the lowest rate of any major industrialised country anywhere, including Japan and the United States – and having also cut small business tax from 23 to 20 pence and introduced a new starting rate of tax for small companies of 10 pence in the pound we are considering further measures to extend the cuts in small company tax.

And of course businesses will also benefit from the reduction in long-term capital gains tax from 40 pence to 10 pence.

When we came into power we had many priorities: health, education, transport, pensions. Amidst all these priorities we decided that enterprise and long-term investment would be enhanced by reforms in capital gain tax including cutting rates – and we set aside hundreds of millions of pounds to do so.

Capital gains had been fixed at 40 per cent for almost ten years. So in 1998 we cut the long term rate of capital gains tax for business assets and next April we propose doing so again: from 40 per cent to 20 per cent for investments held for one year; and to 10 per cent for investment held for two years.

And because Britain’s challenge is to grow more successful dynamic businesses, I am introducing new measures that help dynamic managers build up these businesses and rewarded for doing so.

The new Enterprise Management Incentive scheme allows growing companies to give options of up to 3 million pounds of shares – free of income tax and national insurance – to recruit and retain the employees they need to be successful. Since it was introduced in July 2000, over 1500 companies have used EMI for more than 12,000 of their employees. In the Budget I am considering doubling the asset limit to £30 million – doubling the asset size of companies which can benefit from EMI.

We know that open not closed economies are the driving force in productivity growth. And we know that it is the global reach of business, not protectionism, that is the key to dynamism and growth.

Because competition is the spur to efficiency and innovation, and because greater competition at home will mean greater competitiveness abroad, we are creating the most open competition policy this country has ever seen.

In 1997, we made monetary decisions independent of political influence within a long-term framework where the policy objective is clear, the division if responsibility is clear, and there is maximum transparency and accountability. Now we must do the same for competition policy – sending an important message that the days of picking winners and uneconomic state subsidies and corporate fixes are over and cannot return and wherever there are barriers to competition we will tackle them.

And because we recognise the increased importance of innovation to economic growth we have already:

invested 1 billion pounds extra in science;
established a new University Challenge Fund to help commercialise British inventions; and
created eight new Institutes of Enterprise to bring management skills into engineering and science.

The new Research and Development Tax Credit gives even the newest and smallest business cash help to research and develop their innovations, even before they make their first profits. At a cost of £100 million this year, rising to £150 million next year, this targeted tax cut ensures that nearly a quarter of small business research and development costs will be underwritten by Government.

But we need to do more to turn scientific inventions in Britain into jobs for Britain by honouring the spirit of invention, facilitating the exploitation of invention and encouraging the commercialisation of invention.

So we are discussing with large companies a further tax cut for innovation and R&D that will give Britain one of the best incentives for innovation anywhere in the industrialised world.

Because we understand the importance of e-commerce we have set ourselves the task of making Britain the most favourable environment in which to conduct e-commerce – creating a new legal framework to give new incentives for businesses to use the internet, putting government services themselves on line, and gearing our education and training system to the IT revolution.

All our reforms are designed to create a more adaptable workforce for the modern dynamic labour market where people change jobs more often and skills are at a premium.

I am grateful to the 60,000 employers in Britain who have signed up to participate in the New Deal and are now working on the Ambition programme to link people without jobs to the skills we now need. To ensure proper supply of labour, we will continue to tighten the responsibilities expected of the unemployed, and with our tax and benefit changes we will ensure that for families work pays more than benefits.

I am grateful too for the IoD’s support in extending employee share ownership. Two years ago only a fraction of British employees, and an even smaller minority of those outside senior management, owned shares in the companies that they worked for. Today, 470 companies are set to enjoy the benefits of the share incentive plan – involving 700,000 employees – moving towards the first one million to benefit – representing a key milestone in removing the “them and us” culture.

Many of you have rightly complained about complexities, delays and anomalies in our physical planning system. We will reform and modernise our physical planning laws and Steven Byers will publish in the next few weeks a green paper promoting reform which will strike the right balance in a modern economy which puts an ever higher premium on speed, efficiency and flexibility – especially to reflect the widely differing needs of all our regions.

And the efficiency we seek in the private sector we demand on the public sector. Having doubled net public investment by 2003-04 to £18 billion per year, and agreed £180 billion of new public and private investment over ten tears for transport, government at every level – national, regional, and local – must raise its game.

And, early next year, we will take the enterprise agenda forward in Europe with proposals in a European Economic Reform White Paper to modernise capital and product markets, encourage innovation and an enterprise culture, and develop a modern skills base.

I want a Britain where just as employment is for all, enterprise is open to all – a Britain with a creative, innovative and enterprising economy in every area.

Indeed we must do far better than we have in the past. We must go beyond what was achieved in the eighties giving more people the chance to turn their ideas into profitable companies, to start firms, create jobs and win business for Britain.

And I want to send a message to every business and every would be businessman or woman: if you are starting up, hiring for the first time, growing and looking for capital, seeking to export or seeking to float as a company: we are on your side, whatever your trade whatever your region, whatever your ambitions.

So we are simplifying vat for half a million small firms and have published proposals for a new flat rate scheme – reducing business costs by up to £1,000 a year – a move widely supported by trade bodies.

And we introducing a further deregulatory measure – at present companies must compile separate accounts for Companies House and for the purpose of calculating their tax. We are now consulting with business on abolishing the requirement for separate accounts for tax, cutting both red tape and business costs.

I would like to ask directors and managers here and throughout the country to take in interest in helping renew and regenerate our high unemployment areas – often inner city estates and old established heavy industry communities where small business creation is, and remains, low.

As I told the Labour Party conference there is no solution to the problems of these high unemployment areas without the creation of more small businesses and more businesses generally. I see old established areas as new opportunities for business, new markets with untapped resources for economic development.

So to cut back the cost of investing in high unemployment areas, and regenerate out towns and cities, in August this year we introduced:

a cut in VAT on residential property conversions to 5 per cent;
100 per cent first year capital allowances for bringing empty flats over shops back into the residential market; and
an accelerated tax relief set at 150 per cent for cleaning up contaminated land and considering a further corporation tax relief, for firms investing in our new urban regeneration companies.

And to make the first stages of buying property and bringing land back into use tax free we are considering introducing a stamp duty exemption on property sales in our most disadvantaged areas.

To cut the cost of small business borrowing we have introduced a new Community Investment Tax Credit will create the first Community Development Venture Capital Fund – a partnership between government, financial institutions and the charitable sector for which the chairman of our review, sir Ronald Cohen, proposes a capitalisation of £40 million.

But we can do more. I want us to spread the message of enterprise throughout the country and to open up the opportunities of enterprise to all.

I care passionately about this. And I know George Cox your director general does too and I praise him for the work he has done in Enterprise Insight, taking the enterprise message to schools and colleges.

When I was at school the world of education was far too remote from the world of business.

I want every young person to hear about business and enterprise in school; every college student to be made aware of the opportunities in business, even to start a business; and every teacher to be able to communicate the virtues of business and enterprise.

I want businessmen and women going into school and into the enterprise classes; I want every student to have a quality experience of working in a local business before they leave school; I want every community to see business leaders as role models.

We have begun to improve the national network that brings schools and businesses together – increasing the scale of enterprise classes in our schools. But I want to see more businesses even more involved with their local schools – improving the quality of work experience for year 10 students and business placements for teachers.

Around Britain there are many successful examples of schools and businesses working together for the benefit of both. And I want all schools – especially those in disadvantaged areas – to benefit.

I applaud the new national enterprise campaign “Enterprise Insight” – promoting the work of partners including Businessdynamics and Young Enterprise, bringing schools and businesses closer together and providing more than 100,000 young people every year with hands-on experience of what it is like to be in business. Since its launch earlier this year 246 companies have already signed up to take part.

If we are to have a deeper and wider more entrepreneurial culture we need, we must start in our schools and colleges. The Secretary for Education and I have asked sir Howard Davies to examine how we can make progress.

And I urge all businesses throughout the country to adopt a school – whether it is by taking students on work experience and teachers on work placements, sending employees into schools to help run enterprise classes, or being business governors.

In this way, every business in the country will be helping to build the new enterprise culture that we all want to see.

Conclusion

We must not rest but be determined about Britain’s future, not relax our efforts but step them up and prepare for the next stage of our productivity drive by removing all the old barriers to employment and prosperity.

If we do so there is a great prize – not only the long-term stability you asked us to build but sustained rises in growth and prosperity for our communities and our companies, and from which the whole country can benefit.

The speech made by Gordon Brown, the then Chancellor of the Exchequer, on 5 November 2001.

I am delighted to be here this evening to pay tribute not just to the work of the CBI and to British business but to commend you – as individual company directors executives and managers – on the work you do, the service to our country you give, the difference you make to the economy, to employment and to the prosperity of Britain.

As we all know this conference is being held at no ordinary time, but in the wake of a terror so awful and so momentous that it has transformed our times and our task.

All of us here today will wish to express our sympathies to the families of those employees in the financial services and other industries and in the fire, police and other public services who lost their lives on September 11th. Many companies represented here today lost valued employees.

And because terrorists intended to bring the world’s financial system to a halt, to undermine the very prospect of global prosperity, we – Governments and business – must continue to show — as we have shown by our actions in maintaining the conditions for stability and growth — that we will not succumb or surrender to their threats.

And we have found that action, more than ever, must be coordinated not just nationally but internationally.

Britain will continue – as Tony Blair has said – to stand shoulder to shoulder with America. And it is a tribute to international cooperation that this challenge to the global economy is being met by a global response – that not only have interest rates been brought down worldwide but the central banks of America, the euro area and Japan as well as Britain have made clear their determination to take any necessary further action.

Oil prices – which have previously risen in times of trouble – have fallen in the last month and we will continue to work with the oil producing countries to ensure steadiness of supply and prices. And where markets have failed, as on airline insurance, governments across Europe and America acted to fill the gap — with a new short-term insurance guarantee.

Because no country can insulate itself from the global economy, with world trade slowing, growth slowing sharply in America, Japan and Germany and no-one yet sure about the final impact of events, these are times that are uncertain, times that test us here in Britain.

I understand people’s worries about the effects on their jobs and livelihoods of a global slowdown which will inevitably impact on Britain’s economic growth. And in the pre-budget report we will do more to recognise the vital contribution of modern manufacturing to exports, innovation and our great regions.

But it is because of the tough decisions we took from 1997 to create monetary and fiscal stability that we are today in a better position to withstand the ups and downs of the economic cycle.

Ten years ago when the US slowed at a time of international conflict, British inflation had risen above 10 percent and Government had to raise interest rates even when unemployment was rising above 2 million.

Today because we have made the Bank of England independent and have a credible monetary framework based on a symmetrical inflation target, inflation has been at or near our target of 2.5 per cent for four years. The longest period of low inflation since the 1960s.

A decade ago British interest rates peaked at 15 per cent and were above ten per cent for four years.

But because since 1997 we have combined monetary discipline with fiscal disciplines which people know we will keep, they have averaged 6 per cent. And today they are 4.5 percent, for homeowners and businesses the lowest long-term interest rates for nearly 40 years.

And while we will never be complacent, at this time of global slowdown – unlike 10 or 20 years ago – the fundamentals are sound: low inflation, stable public finances. So despite the difficulties and pressures we now face, with interest rates cut 6 times since the start of 2001 and fiscal policy supporting growth this year, I am cautiously optimistic.

We all know that as long as terrorism is allowed to threaten, our economy can never be fully secure, our society never fully at ease. So meeting the necessary cost of military action – and our international development responsibilities in Pakistan and Afghanistan – is a duty we must and will discharge, paying what it needs to root out terrorism and the supply of funds and equipment to terrorism. And it is a duty we are able to discharge because of the discipline and tough rules we have applied to public spending in the past.

But – as I have told my Cabinet colleagues and I now repeat publicly – in other areas of spending this is the time for more discipline not less. And I can say to you that, throughout, we will not relax our fiscal disciplines and we will work within the fiscal rules we set in 1997 and have upheld throughout.

Stability is the precondition but you all know as businessmen and women that it is not enough.

As the CBI and the TUC recognised when we met at Downing Street last week, at this time of global uncertainty it is even more important that we work together to enhance wealth creation and raise productivity. In the years to come we will need substantial productivity gains to continue to raise our trend rate of growth and thus our national prosperity.

While we have world class companies represented here tonight, and I applaud you for your contribution to Britain’s success, the conclusion of the CBI-TUC review submitted to the Government last week is that overall productivity in Britain is still far too low and that if we are to achieve our aim for this decade – the fastest rise in productivity of our competitors – we will, all of us, with labour market, capital market and product market reforms have to modernise, change and reform.

Tonight I want to assure you from the Government that not only will we continue our policy of moving the unemployed from welfare to work – indeed we will enhance both the New Deal’s opportunities and sanctions – and our measures to enhance labour market flexibility as a contribution to higher productivity, but we will also, in consultation with you, move forward the enterprise agenda:

First, to reward enterprise and entrepreneurship I can say tonight that the Budget will significantly extend our cuts in capital gains tax. I will propose that for business assets held for 2 years, capital gains tax which in 1997 was 40 per cent will be cut to 10 percent – designed to provide incentives for investment in wealth creation and greater rewards for success – indeed a more attractive capital gains tax regime overall than the United States.

Second, in the next Budget I will also propose extending our cuts in small company corporation tax where instead of 23p in the pound the rates are now 20p and in many cases only 10p, and there will be a simplification of the VAT system as we introduce further deregulatory measures to help small businesses.

Third, many of you have rightly complained about complexities, delays and anomalies in our physical planning system. We will reform and modernise our physical planning laws and Steven Byers will publish in the next few weeks a Green Paper promoting reform which will strike the right balance in a modern economy which puts an ever higher premium on speed, efficiency and flexibility – especially to reflect the widely differing needs of all our regions.

Fourth, we are introducing a new competition regime – with decisions taken out of the hands of politicians and truly independent of the political process – that will match the best in the world.

Fifth, your needs include the best skilled manpower and work ready staff, and we are ready to fulfill our responsibilities by putting additional resources into a reformed training system and ready to sanction an extension of the work permit system that has already raised entrants to the UK from 50,000 three years ago to 150,000 this year.

Sixth, the efficiency we seek in the private sector we demand in the public sector. Having doubled net public investment, Government at every level – national, regional and local – must raise its game. We will maintain our £180 billion ten year plan to modernise our transport infrastructure – and any one of you who have travelled across Britain know the importance to business and communities of this doubling of transport investment

And I leave you in no doubt that we will continue our programme of public private partnerships. Whether it be in the London Underground or in the air traffic control service, I am convinced that instead of the old sterile divide which pitted public against private, we do best when public and private sectors work together to enhance investment in our transport and infrastructure.

And if we as a nation are to have a deeper and wider entrepreneurial culture we must do more to extend knowledge of enterprise to every community. We all know that for too long the world of business and the world of education existed apart from each other. With your support I want every young person to hear about business and enterprise in school, every college student to know there are opportunities in business, every teacher able to communicate the virtues of enterprise, and I want young people growing up to see successful business leaders locally and nationally as role models, so encouraging a stronger pro-business, pro-enterprise, pro-wealth creating environment in our country.

It is not just in Britain but in Europe as a whole that a modern route to both economic stability and a more entrepreneurial economy based on economic reform is needed.

As in Britain, the euro area has been establishing a new framework for economic stability.

As I set out at the Lord Mayor’s Banquet earlier this year, our approach is – and will continue to be – considered and cautious: one of pro-euro realism.

Pro-euro because, as we said in 1997, we believe that – in principle – membership of the Euro can bring benefits to Britain.

Realist because to short-cut or fudge the assessment, and to join in the wrong way or on the wrong basis without rigorously ensuring the tests are met, would not be in the national economic interest.

A single European currency – with a fully developed single market – could in principle increase trade and competition through the elimination of exchange rate risk and through more transparent prices; reduce transaction costs, again increasing trade and investment, and benefiting everyone travelling in Europe; and lower long-term interest rates, again good for investment and so good for growth and jobs.

Because the Government is determined that we will make the right long-term decisions for Britain, we will not take risks with Britain’s hard won stability.

So the assessment as to whether it is in the British national economic interest or not will be comprehensive and rigorous. It is only on this basis – taking into account all relevant economic information – that the Cabinet will decide whether to recommend membership to Parliament and then to the British people.

While the assessment has not yet started, the necessary preliminary analysis – technical work that is necessary to allow us to undertake the assessment within two years as we promised – is underway.

The scope of the technical and preliminary work for the next assessment of the five tests is as set out in the original October 1997 assessment. Although there have been new developments since the 1997 assessment, the underlying issues to be analysed remain the same.

The 1997 statement detailed five economic tests:

– First, sustainable convergence between Britain and the economies of a single currency;

– Second, whether there is sufficient flexibility to cope with economic change;

– Third, the effect on investment;

– Fourth, the impact on our financial services industry; and

-Fifth, whether it is good for employment.

Now the preliminary and technical work is updating the analysis on:

The cyclical behaviour of the UK economy relative to the euro area and their relative responses to economic shocks;

The mechanisms by which product, labour and capital markets adjust and how well and how quickly they work;

The impact of the single currency on the cost and availability of capital, macroeconomic stability, the stability of the real effective exchange rate and the location, quality and quantity of investment;

The effect of the single currency on financial services, including the changes that have occurred in this sector in the UK and the euro area since 1997; and

The impact of the single currency on trade, competition, productivity and employment.

Our commitment is to complete a full assessment of the five tests within two years of the start of this Parliament.

And I can tell the dinner this evening that our commitment “to prepare and decide” is being maintained with the publication of the latest euro preparations study today.

We have always said that we must prepare together – not one or two businesses, but Government and business working together.

The Government’s Standing Committee on Euro Preparations – with membership drawn from the public and private sectors, including the president and Digby Jones – met again last Monday as a key part of our consultation.

And we are today publishing our latest Progress Report on Euro Preparations. In just a few weeks’ time, Euro cash will displace existing currencies in the euro area. This will have an impact on many UK businesses and also on citizens in their capacity as tourists. I an pleased that Government and the CBI are working together to give advice to businesses – indeed the next phase of our information campaign starts today, including the direct mailing of sample case studies and an information booklet to 1.5m SMEs.

And in addition to this help for business, together Peter Hain and Ruth Kelly will also be sending out an information leaflet for UK travellers to help them with the transition to notes and coins.

Planning for possible UK entry also continues under the national changeover plan. The Government has invested £13m since the publication of the last Report on Euro Preparations in November last year, bringing the total invested on changeover planning to £23.5million.

These are the preparations we are making together. Because we are resolved we will not leave Britain economically unprepared.

Around the future of the Euro there is of course an ongoing national debate.

But across Europe a wider debate on the future of Europe is also taking place and Britain must be at the centre of that debate too – a debate on economic reform amidst the challenge of globalisation, enlargement into the east and the wider Nice agenda to make decision making in Europe more accountable and relevant to the population as a whole.

Europe is where we are, where we trade, from where thousands of businesses and millions of jobs come. We are part of Europe by geography, by history, by economics and by choice. So the case is not only for a reformed Europe but for Britain leading reform in Europe.

Getting the economic future for Europe right matters for Britain because over three quarters of a million UK companies now trade with the rest of the European union. When we joined Europe in the 1970s, less than 8 billions of our trade was with the rest of Europe. Today it is £138 billions – more than half our total trade – with 3 million jobs affected.

But while the single market encompasses 375m people today – and potentially nearly 500m in the future – we still have a long way to go to secure for British business and British consumers the full benefits in commercial opportunities and consumer prices.

The 1988 Cecchini report examined in depth the potential economic gains of the single market, asserting that completing it would raise GDP by 4.5 percent and create 1.8 million new jobs.

Yet by 1996, the boost to GDP had been only 1.5 percent and almost 1 million new jobs had been created. And there is little to suggest that by 2001 we have realised even half of the potential gains. So we will publish a White Paper on Economic Reform setting out the next stage of our plans to liberalise capital labour and product markets

There are those who say that in the current climate Europe can justifying going slow on its programmes of economic reform, that now is not the time for pushing forward with change. I say to them that now is the time – when we can see the interdependence of our economies and the challenges of globalisation more clearly – now is the time to drive forward the reform agenda to improve the flexibility and productivity of the European economy.

Firms across the UK will benefit with new opportunities to trade in the 14 member states if:

– We complete liberalisation in telecoms by the end of 2001, capital markets by 2003, financial services by 2004;

– Continue to push energy liberalisation, promote tax competition not tax harmonisation, drive down old fashioned state subsidies which undermine the single market while ensuring the state aid regime tackles market failures and promotes efficient dynamic competitive markets;

British financial service firms are well positioned to benefit from the completion of the internal market in financial services.

But what we do not want are directives simply designed to increase regulation at the expense of liberalisation. I know that the prospectus directive is a particular concern for the CBI and its members in this respect and the Government will continue to focus on the outcomes for firms and consumers that we are trying to deliver.

And Europe must focus not just on internal reform but because I believe fortress Europe is an idea that has had its day we must focus on how Europe can be less inward looking and more outward looking and more open to trade and commerce with the rest of the world.

Here again the economic reform agenda is clear and challenging: and first and foremost it is crucial that we ensure the launch of a broad and balanced trade round in Doha. The EU and the US should work closely on pushing for greater market access for the developing worlds, have high ambitions to eliminate industrial tariffs, and make genuinely liberalising deals on agriculture, investment, competition and the environment. The gains can be in the order of 400 billion dollars a year, 150 billion for the developing countries. Moving forward trade liberalisation at Doha in the next few days will send out a powerful message of our confidence in the future of the world economy.

And we can do more. The annual two way flow of goods, services and direct foreign investment between the United States and Europe is now nearly a trillion dollars and we need only look at the impact of the American slowdown on European economic growth to understand this growing economic independence.

So strengthening our ability to push forward with the multilateral trade agenda, the conditions now exist for the expansion of the transatlantic economic partnership, mirroring our security alliance in NATO. And here what we need now is a Cecchini-style report that set outs in detail the benefits for growth, prosperity and jobs on both sides of the Atlantic from a wide-ranging effort to end the remaining industrial tariffs multilaterally, achieve deeper liberalisation of trade in services, remove unnecessary non-tariff barriers, increase competition and develop more effective ways of pre-empting damaging transatlantic trade disputes.

We in Britain do not have to choose – as some would suggest – between America and Europe, but are instead well positioned as a vital link between America and Europe.

So this is a time of great challenges and risks but also a time of great opportunities – in Britain, in Europe and across the world.

I believe that, learning from each other, all of us – businesses and Governments working together – can face the great challenges of today’s economy not by resisting change but by helping people cope with it; not by standing still but by radical economic reform; and not by protectionism but by promoting open, competitive markets and international cooperation.

It makes for a Britain that is true to its great historical qualities: outward looking and open to the world, committed to an enterprise culture and ambitious to succeed; fully equipped to lead in the 21st century economy.

The speech made by Gordon Brown, the then Chancellor of the Exchequer, in London on 19 December 2001.

I.   Introduction

I am delighted to be addressing the Local Government Association General Assembly.

You represent the democratic leadership of our cities, towns and communities across England and Wales, and I want to begin by acknowledging and indeed congratulating you for the work you undertake, the hours you give up, the service you offer, the good you do and the difference you make in building stronger communities – making the very idea of community work in practice.

And I am here today to celebrate the importance of our strengthening partnership, a modern partnership between central and local government without which neither of us will be able to deliver the stronger economy and better services the British people have demanded of us.

It is a partnership not of convenience but a partnership of principle because whenever we walk down the street, collect our kids from school, turn to the emergency services, or look for help for the weak and the frail we know we all depend upon locally provided services.

It is a partnership of principle because every day a millions of acts of service by dedicated public servants  – inspired not just by individual commitment but by a higher ideal of duty and obligation – shape the ethos of public service in our country.

And our partnership -local and central government working together – is strengthened by an equally important belief we share in common: whatever people said in the past we know that Whitehall does not know best, and we know that effective service delivery for families and communities cannot come from central command and control but requires local initiative and accountability.

For all the time I have been involved in politics I have believed in devolving power, so that those who are affected by the decisions are close to and can hold accountable those who make the decisions – and our aim must always be the maximum devolution of power possible: government encouraging not stifling local action, local people making local decisions about local needs.

And our strengthened partnership today in 2001 is built on something equally fundamental: on our commitment to advance shared goals, to ensure opportunity and prosperity not just for some in our country but for all.

First: to strive for full employment – from a foundation of economic stability strengthening the programme to move the unemployed from welfare to work, so that in every region there is employment opportunity for all;

Second: raising productivity to match our European competitors and thus raising our living standards – with a commitment for every region to high quality long-term investment in science and innovation, new technology and skills;

Third: eliminating child poverty – ensuring not just some but all children have the best start in life;

Fourth: tackling pensioner poverty and ensuring pensioners enjoy dignity in retirement;

Fifth: from transport and housing to health and education renewing our public services to rise to today’s needs – meeting people’s rising expectations by delivering high quality public services for all.

In the LGA’s six commitments portfolio – which I am delighted to launch today – you are also setting out your priorities and I see exactly the same focus on full employment, world class public services, no child left behind and for every pensioner the best of care.

And my message today is that the great challenges that face our country cannot be met if we stand apart from each other, can only be met if we work together. Indeed the key insight of these last four years is that the goals we share cannot be realised in practice without central government devolving power to local communities.

II.   A new central- local government partnership

Our first task in 1997, and the foundation of all we do, was to create a national framework for stability, for sound public finances and for employment growth

And the difficult decisions we took then – to make the Bank of England independent, to rein in spending, to cut debt, to put up interest rates – are the platform not just for low inflation and 1.2 million more in jobs but also for the largest sustained growth in investment in our public services for fifty years with:

– Growth in spending of 4 per cent on average this year, next year and the year after;

– public investment almost doubling year on year this year, and rising to three times its 1996-7 level by 2003-4;

– £10 billion a year saved from debt and low unemployment now invested in health, education and our public services.

And as we started putting in place this new national economic framework we also began putting in place the building blocks that allow us to devolve power and responsibility.

In the first parliament we created a devolved legislature in Scotland, Wales and Northern Ireland, restored city-wide local government to London, and created regional development agencies. And at the beginning of this year John Prescott and I set out our plans for a new generation of regional policies – strengthening, within the regions, the essential building blocks of self generating growth, the capacity to innovate, invest, build skills and match the unemployed to jobs available. Offering development agencies new freedoms and flexibilities and in return demanding strenuous targets be met in skills, innovation, business creation, new technology and employment. A new regional policy – locally sensitive and locally delivered, one through local management decisions.

And just as we made a start with regional policy in the last parliament we also made a start in devolving power to local government, moving away from the destructive centralism characteristic of the years marked by universal capping, Compulsory Competitive Tendering and the Poll Tax.

So in the past few years we have:

– Boosted financial support for councils, through real terms increases in revenue and in capital expenditure for four years in a row

– Replaced the bureaucracy of CCT with the duty of best value, enabling councils to develop their own methods of service delivery rather than being constrained by the requirement to cut costs at all cost

– Improved the transparency and efficiency of local leadership through provision for new constitutions for local government following local consultation;

– Expanded the capacities of local government by introducing statutory community strategies, and a new power to promote community well-being through coordination and partnership with other local actors, via local strategic partnerships and the neighbourhood renewal fund.

Showing our approach is a belief in local government not local administration.

In the first parliament, to support our national public service agreements we developed local public service agreements. And as I said to the Labour party conference in February this year, over the next two years the number of local PSAs matching resources to outcome targets signed with local authorities is rising from 20 earlier this year to 150 by 2003  – which we will match with further steps towards greater flexibility: flexibility and resources in return for reform.

III.    New partnership

These are only the first steps in expanding our partnership and we are now ready to do more to achieve our goals of full employment, higher quality of public services, and an end to child and pensioner poverty – combining more flexibility and more resources in return for more reform and better results.

And as set out in the White Paper launched by Stephen Byers last week, we are:

– Abolishing the council tax benefit subsidy limitation scheme and providing greater freedom for all councils to decide council tax discounts and exemptions

– Making councils themselves responsible for deciding how much they can prudently borrow; providing greater freedom for councils to invest;

– Removing unnecessary bureaucracy as well as targeting a reduction of 50 per cent in the numbers of plans and strategies that government requires councils to produce;

– Providing councils with wider powers to deliver services to others and to work in partnership;

– Restricting ring-fencing to cases which are genuine high priorities for government and where we cannot achieve our policy goal by specifying outcome targets.

And high performing councils will receive extra freedoms to lead the way to further service improvements including:

– The ending of reserve powers over capping, as a first step towards our long term goal of dispensing with the power to cap altogether

– Further reductions in ring fencing of revenue from central government, and of support for capital investment

– More freedom to use income collected locally from fines and charges

– Extra exemptions from the plan requirements of central government, and more discretion over best value programmes

– And a much lighter touch inspection regime

Reforms that will significantly expand the freedoms and flexibilities available to local government.

Our approach is to devolve power and responsibility so that these freedoms will be accompanied by greater accountability to local communities.  That is why alongside devolution of power we will introduce a new comprehensive performance framework – providing clear and concise information about councils? performance, enabling us to make our inspection regimes more proportionate, to target support where it is most needed, and to identify the small minority of failing councils in need of tough remedial action.

A democratic framework for devolving power to modern local authorities based on new rights and new responsibilities – the power you need to improve your performance – the responsibility expected of you to serve your communities.

And in this Parliament we are ready to go even further to enable local people to do more to make local decisions about meeting local needs. Already the option of congestion charging is now available and being implemented in London. I believe that we should be prepared to consider further radical options to ensure devolution of power and responsibility go hand in hand so that the public can get the best possible services.

And once we have carried out further analysis, we shall establish a high level working group involving ministers and senior figures from local government to look at all aspects of the balance of funding, reviewing the evidence and looking at reform options.

IV. Putting partnership into practice

So let me set out how – through local and national government working together, building on the new freedoms and flexibilities the white paper has put in place – we can rise to today’s challenges and meet our shared goals.

First, employment.

I could talk about the 1 million jobs we have created, but i am more anxious about the 1 million men and women still left out, still unemployed – and as local councillors I hope you will want to play a bigger role in the next steps to help the newly redundant get back into work quickly and expand the new deal to assist those hard to employ. This means following the innovative example of councils such as Brighton and Bristol, councils that have tailored supplementary employment programmes to complement the new deal.

Last month Alistair Darling announced 20 special projects to test whether guaranteed jobs for the long term unemployed could get more people permanently off the dole. It is a new opportunity – a guaranteed job – but there is also a new obligation to take it up. And as we learn from these successes, I hope we can work together to make long-term unemployment a thing of the past, and make possible full employment in every region and every community.

Second, the economy and enterprise.

Every one knows that the sources of growth in every local economy are local innovation, local skills, and local enterprise. More jobs of the future will come from small businesses growing in each of your areas than from large inward investment projects.
So together we must remove the barriers that prevent local firms starting up, growing bigger, getting investment in capital, finding export markets and training skilled staff.

That is why together in every local area we must bring about a revolution in education, skills and training.

As long as prosperity by-passes a single community or a single family our work is not yet done.

And it is why together we must concentrate on lifting up the high unemployment areas that for too long have been left behind and why we have introduced – and i hope you can encourage local economic activity to benefit from:

– A cut in VAT on residential property conversions to 5 per cent

– 100 per cent first year capital allowances for bringing empty flats over shops back into the residential market;

– Legislated for an accelerated tax relief set at 150 per cent for cleaning up contaminated land;

– The abolition of stamp duty for property transactions up to £150,000 so that in 2000 wards across the country the buying of property and bringing land back into use will be tax free; and

– Legislate in the budget for a new tax credit for local community investment.

We want to see a dynamic, enterprising public sector at all levels. And that is why we will give you new freedoms to innovate and to experiment, with wider powers to trade in public, private and voluntary sectors, as well as allowing councils to introduce business improvements districts. And just as we have released borrowing restrictions on local airports, I am prepared to consider how within the new prudential borrowing regime we can engender more freedoms for local government consistent with macro – stability and our fiscal rules.

Third, ensuring every child has the best possible start in life.

You have been responsible for pioneering the development of childcare in the most difficult of circumstances.  Since 1997 we have learned from your successes and it is thanks to you as councils that we can have nursery education with places for all four-year olds – and soon all three-year olds.

And thanks to your imagination and commitment we now have a national childcare strategy to ensure affordable, accessible and quality childcare in every neighbourhood, creating by next year new childcare places for 1.6 million children.

Child poverty is a scar on the soul of Britain, and we must work together – local and national government to make sure that we give each and every child the best possible start in life  – and that no child is left behind.

Our first task as a government was to boost the income of all families with children, with the greatest help for those in greatest need. And that is why since 1997 we have increased child benefit to £15.50 for the first child so that, combined with our other tax and benefit reforms, our poorest families are now better off by 1700 pounds a year on average – money to all children. And having already lifted more than 1 million children out of poverty, we will introduce the child tax credit as well as work towards taking the second million out of poverty – moving closer to eradicating poverty completely.

Our second task is to match higher incomes for these families with better services. I welcome the LGA’s commitment in this area. And I hope that we can work together to develop imaginative ways of delivering these services for the communities you represent building on the innovative examples set by councils such as Sunderland, whose local PSA is providing an active citizenship plan for its children and young adults, or Darlington, which has created a one-stop shop delivering an integrated service for all children in need – demonstrating to us all what pioneering local government is able to do.

In the new economy, which depends on knowledge, innovation, on mobilising the talents of all – getting the best out of everyone – it is essential to develop all the potential of our children. And it has been a tragedy of wasted potential for our country that there are thousands of young people with talent and ability still denied the chance to make the most themselves.

That is why in the four years up to 2003 the real terms growth in education spending will be more than 5 per cent a year and we will in the new spending round make education a priority.

And in the past five years we have worked with you to put in place the framework for addressing the needs of our nation’s children, with local government directly engaged in:

– Sure start for under fives;

– The children’s fund, now rolled out across 40 areas, for 5-13 year-olds;

– Connexions for 13-19 year olds;

– “quality protects” for all children in need;

– And professional learning mentors

Programmes with a new partnership between local government and voluntary organisations to support all our children and identify those who are showing signs of difficulties – providing them and their families with the support they need to overcome personal and social problems.

Fourth: pensioners

Pensioner poverty is a reproach to us all.

And just as we are working to eliminate child poverty – so too we must act now to ensure that pensioners are able to enjoy a higher standard of living.

So we are building on the Basic State Pension – cash increases which boost the incomes of all pensioners – with the Minimum Income guarantee – targeting extra financial support on the poorest pensioners. We have also set aside new funds to ensure that, from 2003, pensioners whose hard work has secured a small occupational pension or modest savings, will be rewarded through the new Pension Credit by extra money, not penalised – as in the past – by losing their benefits – ensuring that pensioners enjoy a share in the rising prosperity of our country.

But we must match higher incomes for pensioners with improved community services – both for pensioners in care and those living in housing which needs to be maintained to a higher standard. We have made a commitment to make decent all social housing by 2010 and have already invested £7.3 billion in local authority housing.

Our task is to match resources with reform in social services and housing. And to help local authorities to be more flexible and innovative, we are:

– Providing local authorities with increased freedoms in the way they deliver social services as their performance improves;

– Investing £460m in high performing local authorities to set up companies to manage their housing stock, leaving them free to think more creatively about the housing strategies they wish to pursue; and

– Extending the prudential borrowing freedoms to housing expenditure, allowing local authorities to choose the best way to invest in their housing.

And in the forthcoming spending review we will do more.

Finally, fifth: I turn to our shared commitment to public services as a whole.

For 20 years at least your job as local authorities had been to protect public services against those who wanted to dismantle them.

Our task together now is different.  It is to move from the old narrow agenda of the years of self protection – when many argued that saving the service had to come first – to the positive task of building, investing, reforming and modernising.

In the public services we are employing more – 140 thousand more in jobs, investing £8 billion more, and with private sector investment of £4.4 billion – making public investment go even further.

There is a new debate in this country – not just about the future financing of our public services, including our health service, but about more than finance – about the future of our public services.

And those of us who believe passionately in the public services must be the most determined to modernise and reform so that public services can best serve the public.

Just as schools exist for school children, the NHS exists for patients; public services exist not for the public servant but for the public who are served.

And our aim must be that every classroom has the best teacher, every school the best staff, every operating theatre the best doctors and staff, every police station the best police men and women – that every public service has the best public servants.

Just as we cannot serve the public if investment is low, staffing poor and conditions unacceptable, we cannot serve them either if service is poor, if performance is faulty, if the atmosphere is confrontational.

Those of us who believe in the public services must learn from both the public and the private sectors and revitalise our public services from the inside or others will seek to dismantle them from the outside.

We will maintain our 180 billion pound ten year plan to modernise our transport infrastructure – a doubling of transport investment.  And we will continue our programme of public private partnerships.  Whether it be in the London underground or in the building on new hospitals, I am convinced that instead of the old sterile divide which pitted public against private, we do best when public and private sectors work together to enhance investment in our transport and infrastructure.

And we should aim for higher productivity in our public services, backing management as well as employee training. And i can tell you that we are supporting the national college of school leadership and the leadership centre for the NHS, devoted to doing more to improving the quality of public service management.

In Britain we rightly pride ourselves in our ethos of public service – an ethos across all areas of the country and across all political persuasions – and a tradition of distinguished public service in Britain that run deep in our history- a tradition for which people from all over the world rightly look to Britain.

All of us can tell our own story about the importance of that ethos of the public service – not just about the past but about the present.

For me, every opportunity I have had – the best schooling, the best chance at university, the best health care when ill – every opportunity I have enjoyed owes its origin to the decisions the British people made to open up opportunity, and ensure there are decent public services.

Just as good teachers have an extraordinary power to make a difference to peoples lives – so too we know nurses and doctors who everyday can make the difference between life and death – social workers, who can transform hopelessness into hope – home helps and care assistants who for the frailest and the weakest make public service the mark of civility – street orderlies and ancillaries who show by their commitment why public service is about improving the quality of life. And if you’ve ever been involved in an emergency remember the calm unflappable skill, the professionalism, and offering self-sacrifice of all our public service.

It shows we are not simply self interested individuals isolated or sufficient unto ourselves but men and women who share the pain of others, a belief in something bigger than ourselves, and who – to paraphrase Robert Kennedy – see pain and seek to heal it see suffering and seek to triumph over it see injustice and seek to overcome it.

Each time a good is done it sends out a message that duty, obligation and service are at the heart of a country that believes there is such thing as a society.

And it is from these acts of selfless dedication inspired by a higher ideal of duty and obligation that not just the ethos of public service is shaped but the very character of our country.

And just as under this government a NHS will be modernised for the coming generation as a national health service free at the point of need – so too public services will be reformed for the coming generation as locally managed public services there to serve the public.

If by our actions you or I, each of us, could lift just one child out of poverty, give one young person a chance of training and a job, give one more person suffering from pain the chance of the help they deserve, give one more classroom the books and computers it needs, secure for one more pensioner a greater measure of dignity and decency in retirement, then we are doing something not just for ourselves but for our communities.

But if working together, national and local government, we can be at the service of whole communities, we can do far more- giving every child the best start in life, creating a Britain where there is employment opportunity for all, offering security for the elderly in retirement, building from the foundation of economic stability public services we can all be proud of. Working together in our partnership of principle.

This is our shared challenge and – working together in partnership – that can be our achievement.

The speech made by Gordon Brown, the then Chancellor of the Exchequer, in Washington, the United States, on 17 December 2001.

Let me first on behalf of Tony Blair and the entire UK Government, which has been proud to be America’s first and strongest ally from the first moment the planes struck the World Trade Centre and the Pentagon, salute the courage of America in face of tragedy: your bravery and resilience in the most testing of times.

America has shown by the actions of all its people that while buildings can be destroyed, values are indestructible; while hearts are broken, hope is unbreakable; and while lives have ended, the cause of liberty never dies.

The war that together we are fighting against terrorism – not as a war for territory but as a war for values – we will win.  Of that I am confident. But the question I want to address today is how we will win the peace.

This is not the first time the world has faced this question – so fundamental and far-reaching.  In the 1940s, after the greatest of wars, visionaries in America and elsewhere looked ahead to a new world and – in their day and for their times — built a new world order.

And what they sought to create was not simply a new military and political settlement that guaranteed peace but also new rules and institutions for a new international economic and social order that would guarantee prosperity.

Coming to America from Europe – the beneficiary of that post 1945 American generosity – I can testify to the greatness of the achievement.  Indeed such was its scale that one of the architects of the new order – Dean Acheson – recalled that he had been present at the creation.

In the truest sense they fought on after victory.  They understood that, tempting as it might be, a retreat into isolationism was neither possible nor desirable.  And what they achieved as they fought their day’s greatest evil – totalitarianism – is what we must seek to achieve as we fight today’s greatest evil – terrorism.

I want to urge that together we form a new global alliance for prosperity that starts from the shared needs, common interests and linked destinies of developed and developing worlds working together.

I want to describe how America’s post-Second World War achievement in what we now call the Marshall Plan should be our inspiration in this post-cold war world — not just for the reconstruction of Afghanistan but for the entire developing world.

The plan proposed by US Secretary of State George Marshall transferred one per cent of national income every year, for four years, from America to Europe – in total the equivalent in today’s money of 75 billion dollars – not as an act of charity, but as a frank recognition that, like peace, prosperity was indivisible; that to be sustained it had to be shared; and that to achieve this goal would require a new public purpose and international action on a massive scale.

Marshall and his colleagues also understood that the challenge extended far wider than the war-torn countries and was about more than temporary aid;  that by combining historic American compassion with enlightened self interest not only did they advance the spread of prosperity but the spread of democracy too.  Indeed by identifying undemocratic as well as unstable regimes as a problem – and the attainment of democratic reform as well as economic reform as a solution – the world could best move forward.

This is what George Marshall meant when, in his great Harvard speech, he articulated his great, unifying vision for a global fight, not against one country or one ideology, but against “hunger, poverty, desperation and chaos”.

And this is why he proposed to transfer resources on such a scale: not merely to secure “a working economy in the world” but, even more important, to “permit the emergence of political and social conditions in which free institutions can exist”.

These were George Marshall’s fundamental aims in 1947, and his vision resonated across the decades that followed – defining the very character of the next half century, defining the very essence of global cooperation.

And they ring with relevance in our own time too.

Just as the urgent needs of Greece and Turkey provided the catalyst for the Marshall Plan, today’s plans for global reconstruction are precipitated by a specific challenge – that of Afghanistan and Pakistan.

Like our predecessors, we understand that national safety and global reconstruction are inextricably linked.  Like them we see the need for a new economic leadership – a comprehensive plan that goes beyond temporary relief to wholesale economic and social development. Like them we see the need for a new global economic and social order grounded in both rights and responsibilities accepted by all. Like theirs, our proposals call on the poorest countries themselves to rise to the challenge.

But while there are parallels between our time and 50 years ago no historical analogies can ever be exact.  Far more so than in Marshall’s time, our interdependence means that what happens to the poorest citizen in the poorest country can directly affect the richest citizen in the richest country. And while the Marshall Plan deserves an honoured place in our history its remedies cannot be blindly or rigidly applied to efforts to solve the challenges of today and the future.

The Marshall Plan was constructed in a post-war world of distinct national economies in need of rebuilding.  Our job is now, in a more interdependent world, to help build – for the first time – market economies for a wholly different environment of open not sheltered economies, international not national capital markets, and global not local competition.

And 50 years on we not only see more clearly our interdependence but the gap between what technology enables us to do – abolish poverty – and the reality of 110 million children without schooling, 7 million avoidable child deaths each year and 1 billion of our citizens in poverty.

It is for these reasons that the whole international community – the IMF, World Bank, the UN and each of our countries – has solemnly committed to the most ambitious development goals for 2015: to halve world poverty, cut child mortality by two thirds and guarantee every child primary education.

Our plan is this:  developing countries must pursue corruption-free policies for stability, for opening up trade and for creating a favourable environment for investment.  In return, we should be prepared to increase by 50 billion a year in the years to 2015 vitally needed funds to achieve these agreed millennium development goals.

The development funding I propose is not aid in the traditional sense to compensate for poverty, but new investment in the future to address the causes of poverty.  In the last 50 years the Marshall Plan’s European model could not be applied wholesale to developing countries because neither the economic foundations nor the necessary open, transparent and accountable systems for managing the public sector were properly in place to prevent corruption and waste.  And too often we saw development funding as short term charity aid, charity for being poor, instead of for a higher and more substantial purpose – long term investment tied to tackling the underlying roots of poverty and promoting sustainable growth.

Indeed the proposal I am making today will work only if we see development assistance in this light:  more effective in-country use of funds to help countries invest and compete; the multi-national pooling of budgets and the proper monitoring of their use to achieve the greatest cost effectiveness of new investment; untying aid so maximising its efficiency in diminishing poverty; and development funding conditional on pursuing agreed goals for social and economic development.

Indeed our proposals are designed to create the best environment for private investment to take off and flourish by increasing funds for investment in health and education – not typically areas in which private capital flows but areas in which public investment is necessary to create an environment in which private investment can flourish.

Our vision of the way forward — akin to Marshall’s challenge to rich and poor countries alike — is that by each meeting their obligations for change all countries can benefit.

For the poorest countries: new responsibilities – to pursue transparent corruption free policies for stability and the attraction of private investment – and new opportunities – with access to increased trade and development supported by a transfer of resources from rich to poor for investment in health and education.

For the richest countries: new responsibilities – to open our markets to reform our international institutions and to transfer resources – and yet new opportunities too – increased trade and a globalisation that works in the public interest.

In future no country genuinely committed to pro-stability, pro-trade and pro-investment policies should be denied the chance of progress through the lack of basic investment in education, health and the basic infrastructure for economic development.

And this is our answer to globalisation and to the critics of globalisation.

Some critics say the issue is whether we should have globalisation or not.  In fact, the issue is whether we manage globalisation well or badly, fairly or unfairly.

Globalisation can be for the people or against the people.  Poorly managed, globalisation can create a vicious circle of poverty, widening inequality and increasing resentment. Managed wisely it can lift millions out of deprivation and become the high road to a more just and inclusive global economy.

Our answer to anti-globalisation campaigners – as I will demonstrate today – is that we shall not retreat from globalisation.

Instead we will advance social justice on a global scale – and we will do so with greater global cooperation not less, and with stronger, not weaker, international institutions.

We will best help the poor not by opting out or by cutting cooperation across the world, but by strengthening that cooperation, modernising our international rules and radically reforming the institutions of economic cooperation to meet the new challenges.

Rules of the game for the global economy

So what are the building blocks for putting this new alliance for prosperity in place?

The first is the most basic: the pursuit by developing countries of corruption free, pro-stability policies building their capacity to compete and improving the terms on which they participate in the global economy.

Round the world the importance of monetary regimes that ensure low inflation is now well understood. There is a greater consensus now than ever before that there is no long term trade off between inflation and growth or unemployment and that without control of inflation long term growth is impossible.

But building from that basic understanding, we need to do more to ensure stability in a new world of ever more rapid financial flows.

Developing countries who need capital most are at the same time the most vulnerable to the judgments of global financial markets.

We know that capital is more likely to move to environments which are stable and least likely to stay in environments which are or become unstable.  And such flows today are quicker than ever they have been before.   So for every country, rich or poor, macroeconomic stability is not an option but an essential pre-condition of economic success.

And I have become convinced that it is in the interests of stability – and of preventing crises in developing and emerging market countries – that we seek a new rules-based system — a reformed system of economic governance under which each country, rich and poor, adopts and operates agreed codes and standards for fiscal and monetary policy and for corporate governance.

Clear transparent procedures for monetary and fiscal decisions include presenting a full factual picture of the national accounts, usable central bank reserves, foreign currency borrowings, and indicators of the health of the financial sectors. Such openness – and a willingness to be monitored for it – would improve macroeconomic stability, deter corruption, provide to markets the flow of specific country- by-country information necessary to engender greater investor confidence and reduce the likelihood of contagion. Operating such codes can also support countries along the way to liberalisation of their capital markets, offering them a route map to avoid destabilising and speculative inflows.

Just as I believe that – over time – the implementation of codes and standards should be a condition for IMF and World Bank support, so too I believe that the international community should offer direct assistance, transitional help and – in some specific and difficult cases – compensation for the early implementation of such codes.

And where countries do operate transparent and effective policies, the IMF’s contingent credit line facility should play a far more proactive role in helping member countries strengthen their financial position, guard against contagion and thus avoid crises.

So these codes are not incidental to the financial architecture for the new global economy: they are the financial architecture for the new global economy, as we move from a global economy which has simply let crises happen to one where we work to diminish their likelihood.

Our capacity to prevent crises is enhanced not just by the operation of codes and standards – and the offer of proportionate help to countries who adopt them – but also by rigorous surveillance, effective international early warning procedures and a more consistent engagement by the private sector.

The new architecture must therefore involve an enhanced role and authority for the IMF, monitoring and reporting on the operation of codes and standards, and my proposal is that we make the IMF’s surveillance and monitoring functions independent of the inter-governmental decisions about financial support for crisis resolution.

Alongside greater independence for the IMF, the capacity to prevent crises would be improved by expanding the work of the financial stability forum – which brings together the combined expertise of the IMF and key regulatory authorities – as an international early warning system to tackle national financial sector problems which have international repercussions.

Where governments discharge their responsibilities for transparency and subject themselves to surveillance, then commensurately increased responsibilities by the private sector should include a willingness to participate in ongoing dialogue with their host countries to identify problems early and develop cooperative solutions for restoring stability.

Where crises do occur, better crisis resolution procedures should involve private creditors, with improved arrangements for the use of standstills and more effective international bankruptcy procedures.

Investment

Open, transparent and accountable national policies, internationally monitored, are the foundation for monetary and fiscal stability. But to ensure the long term investment necessary for growth and development we must do far more.

Rich and poor countries must work together to make investment itself more attractive to both domestic and foreign lenders and find better ways for public and private sectors to cooperate to raise investment levels.

Experience from the 80s onwards has moved us on from the assumption that just by liberalising, deregulating, privatising and simply getting prices right, growth and employment would inevitably follow – a set of assumptions that has proved inadequate to meet the emerging challenges of globalisation in for example Asia where public investment has played a catalytic role in securing growth.

In the new paradigm low inflation and fiscal stability are necessary but not sufficient conditions for securing employment and growth. The new paradigm recognises other drivers of growth in:

• The pursuit of competition and not just privatisation,
• The importance of public as well as private investment not least in education,
• And the need for sound laws and proper financial supervision as well as liberalisation including a route map sequencing the liberalisation of capital markets.

Indeed the country owned poverty reduction strategies  – imaginatively led by Horst Köhler at the IMF and Jim Wolfensohn at the World Bank – are now correctly focusing on creating the right domestic conditions for investment and have highlighted the contribution of public investment to development in infrastructure, sound laws of contract and legal processes that deter corruption, and an educated and healthy workforce.

The challenge is immense:  while in the last decade foreign direct investment flows across national boundaries, including to and between developing countries, have increased fourfold – dwarfing aid – the poorest and least developed countries languish under a double handicap – insufficient foreign investment and inadequate domestically generated savings, with the result that investment per head is in Africa less than 50 dollars a year.

I believe that in return for developing countries implementing codes and standards, there can and should be a new engagement by business as reliable and long term partners in economic development.

Indeed where developing countries guarantee transparency and proper legal and financial systems that deter corruption, the developed world and business should work together to raise levels of investment.  One way forward is joint investment forums.  These councils would bring public and private sectors together, examine the current barriers to investment and discuss in the light of regional conditions how developing countries can secure higher levels of business investment and take the first steps in the international marketplace through intra-regional trade.

And companies investing in developing countries should seek to answer one of the main fears of anti-globalisation campaigners: that where there is no cross border corporate accountability large companies can often seem more powerful than the elected governments of the countries in which they operate.  One way forward is adopting the OECD international standards of best practice for corporate responsibility and advancing both the global compact – introduced by Kofi Annan in 1999 – and the global reporting initiative under which multinationals assess their impact on developing countries.

Trade

The third building block is progress on trade.  We know that developing countries that are open and trade have seen faster growth rates than closed economies. Indeed it is a matter of record that in the last half century no country has managed to lift itself out of poverty without participating in the global economy.

Full trade liberalisation could lift at least 300 million out of poverty by 2015. Even diminishing by 50 per cent protectionist tariffs in agriculture and in industrial goods and services would boost the worlds yearly income by nearly 400 billion, a boost to growth of 1.4 per cent. And while developing countries would gain the most – an estimated $150 billion a year – all countries and regions stand to benefit.

That is why we strongly welcome the WTO agreement in Doha to launch a new trade round focused on development. And in the next phase we must take forward the agreements to open up trade in agriculture, build the capacity of developing countries to participate more effectively in the negotiations and open up greater access to medicines.

Indeed all developed countries should offer access to all but military products from the least developed countries and by banning export credit guarantees for unproductive expenditure discourage and diminish the diversion to arms expenditure of resources needed for education and health.

Financing development

Progress on trade could be worth 150 billion dollars a year to the poorest countries, three times the development aid they receive today. So in addition to policies for stability and investment, new policies for open trade are fundamental building blocks of the new alliance for progress.

But there cannot be a solution to the urgent problems of poverty the poorest countries face without a fourth reform: a substantial increase in development funds for investment in the very least developed countries.

By insisting on dissociating aid from the award of contracts, gains to anti-poverty programmes can be as high as 25 per cent; more effective in-country use of aid can secure further resources for anti poverty work; and better collaboration among donors – pooling of budgets, monitoring of their use to achieve economies of scale and hence greater cost effectiveness and targeting of aid – can also maximise the efficiency of aid in diminishing poverty.

Most of all we must move from providing short term aid just to compensate for poverty to a higher and more sustainable purpose, that of aid as long term investment to tackle the causes of poverty by promoting growth.

The Zedillo Report, whose authors included several prominent Americans, costed meeting the Millennium Development Goals at a total of $50 billion a year, including $20 billion for anti-poverty programmes and nearly $10 billion for education. To meet this challenge my proposal involves the creation of a new international development trust fund which builds on the existing achievements of the World Bank and the IMF but goes further by seeking to address the sheer lack of investment from which the poorest countries suffer.

From the fund, countries operating the poverty reduction strategies can draw investment support and it might be overseen by a new joint implementation committee of the World Bank, IMF and possibly member countries.  To minimise bureaucracy its resources distributed through the existing mechanisms used in the poverty reduction strategies.

Because we must never return to the unsustainable burdens of debt of the 80s and 90s, the very poorest and most vulnerable countries should receive investment help for poverty reduction in the form primarily of grants to partner their soft IDA loans. All other low income countries should be offered interest free loans.  Some beneficiaries will be countries with millions of poor but today classified as middle income countries. Here assistance should be in the form of interest reduced loans, conditional upon implementing agreed poverty reduction strategies and reforms with a national monitoring process including civil society.

In recent months proposals have been made for new and innovative ways to meet this funding gap – the Tobin Tax, arms tax, an airline fuel tax, IMF special drawing rights.  The European commission is examining the Tobin Tax and we are open to investigating other proposals in addition to our suggested development fund.

But in today’s world every international initiative relies ultimately on approval by national governments and their peoples. And it comes down, in the end, to the duties national governments – especially the richest national governments – recognise and are prepared to discharge.

There are many proposals that have been put forward.  We are open to a discussion of their effectiveness.  But if we are to move with the urgency that the scale of today’s suffering demands, we must each as national governments, be bold and recognize the duties of the richest parts of the developed world to the poorest and least developed parts of the same world.

Through richer countries making a long term commitment of increased resources for development for, say, 30 years and with national governments offering a guarantee, either through callable reserves or appropriate collateral as security, it is possible to lever up these contributions to meet our target for extra funds now.

In this way, each year 50 billions dollars more could be available to the poorest countries for investing in economic development.

These proposals are challenging but they are achievable.

The international community has already made a commitment to raising the level of overseas development assistance to 0.7 per cent of GDP.   And in Britain since 1997 we have increased the aid budget of the Department for International Development to 3.6 billion pounds – a 45 per cent increase by 2004.  And we are committed to making substantial additional progress.

Today I am challenging each country to accept their responsibility to play their part and to go further than they have been prepared to go in the past. And it is right that there now be a full debate in the IMF, World Bank and the United Nations as we prepare for next spring’s Financing for Development Conference at Monterrey.

Conclusion

Marshall’s plan was investment for a purpose for a Europe rebuilt.  He summoned forth a new alliance for prosperity between rich and poor countries that, for his time, played a vital part in winning the peace.

So too today – summoning up the spirit of Marshall – the new plan I suggest for developing countries is investment for a purpose, so that they can play their part in a peaceful world.

By each meeting their obligations for change all can benefit.

First, the obligations on developing countries: to end corruption, put in place stable economic policies, to invite investment, to meet their commitment to community ownership of their poverty reduction strategies and to ensure resources go to fighting poverty including education and health.

Second, the obligations on business to engage with the development challenge and not to walk away, including participating in business investment forums and playing their part in preventing and resolving economic crises.

Third, the obligations on the world community as a whole  – international institutions – to reform systems to ensure greater transparency and openness, to open up trade and the opportunities for faster development and to focus on priorities that meet the international development targets.

Fourth, the obligations on the richest governments to the poorest of the world – our commitment to tackling the inequalities through a substantial and decisive transfer of resources; not aid that entrenches dependency but investment that empowers development – investment money that is, in the truest sense of the world, increasing the capacity of the poorest countries.

A $50 billion a year investment fund that invites applications for health, education and anti poverty work will help build the capacity of the poorest countries to compete and engage. And is the high road to a more just and inclusive global economy.

Our answer to anti-globalisation protestors is that, in the spirit of Marshall, we shall not retreat from globalisation.  Rather, we will advance social justice on a global scale, as today’s global alliance for peace is transformed into tomorrow’s global alliance for prosperity.

Since September 11th, President Bush, your government, your armed forces and your people have led a great and global effort worthy of America’s history and its ideals.

With steadfast resolve we work together to win the war against terrorism.  Now, in the great tradition of Truman, Marshall, and that earlier generation, let us also resolve to fight on after victory. Let us together seize our moment of opportunity to win the peace.

In the words of Victor Hugo:

“The future has many names
For the weak it is unattainable
For the fearful it is unknown
For the bold it is opportunity”

This can be our permanent memorial to those whose lives have been lost – that, in remembrance of them, we build the world anew.

Let it be our generation that takes up the challenge and discharges our duty to remove the scar of poverty and hopelessness from the worlds soul.

Let it be our generation that shows those who suffer in the bleakest places of the world that we can light a candle of hope which, radiating outwards, can cut through the darkness and shame of injustice and emblazen across the world a message of confidence and faith in the future.

The speech made by Gordon Brown, the then Chancellor of the Exchequer, in Nottingham on 9 February 2001.

Introduction

It is a pleasure to be here in Nottingham this morning and I am particularly pleased to be here in the Nottingham Business Centre opened fifteen years ago by John Smith, created out of what was once the headquarters of Raleigh and now a thriving centre for new businesses – a regeneration that maintains and now extends the spirit of enterprise for which this city and region is rightly famous round the world and I am delighted too to have the opportunity to visit the East Midlands, a region where in the last four years 40,000 more people have found jobs, where because of the efforts of employers in this region youth unemployment has fallen by 20 per cent and long term unemployment has fallen by 70 per cent.

And I think it important to record that vacancies – at up to 60 thousand – are at a record level, today over 50 per cent higher than what they were even at the peak of the boom in the late eighties.

Inner City 100 Initiative

It is fitting that here I am able to launch this morning the nominations for the Inner City 100. This exciting and unique initiative is an important part of our drive to open up enterprise to all through celebrating and show-casing the top 100 business successes in our most challenged inner cities – including here in Nottingham and in Leicester.

IC 100 will show that even the most disadvantaged inner cities are not the enterprise “no-go” areas of the past, but the investment opportunities of the future. It will start to change the way that we see these areas and the way these areas see themselves.

Inner City 100 brings together a powerful partnership from across Britain, including the Regional Development Agencies, the Small Business Service, the Royal Bank of Scotland, the New Economics Foundation and Financial Times which will publish the final top 100 list in the autumn.

And I am grateful to all those involved and hope that business leaders and local representatives across the country will give their support.

I look forward to hearing about the first nominations in a few minutes.

I would like to thank you all for coming to this gathering of businessmen and women, academics, representatives from the Regional Development Agency together with respected Members of Parliament – great advocates in Whitehall for the needs of this area – at the start of our pre-Budget consultation roadshows.

And let me say this pre-Budget consultation, one of many to come in the next few days and weeks, is a vital part of the modern Budget process.

A few years ago the Budget process was shrouded in total mystery. By the time the Budget emerged from the red box on Budget day, Treasury ministers had spent many weeks in what was called “Budget purdah” – making no speeches, no appearances to listen or discuss the economy and insulated from public views and public scrutiny. A Budget untouched by consultation.

And sometimes the results showed.

But I believe a modern economy requires a modern Budget process. If we are to face the challenges of the global economy we must face them together – Government, business, local communities – in an open and consultative process – discussing ideas, listening to views, seeing at first hand what is needed, where the gaps in economic policy are and discussing with those who know best, those who created the best, how best they can be filled.

And there is a special reason today for a more strenuous pre-Budget consultation. As I said in my Pre-Budget Report statement, our hard-won and newly won stability now offers Britain a unique opportunity we can either seize or squander – the opportunity to build from that platform of monetary and fiscal stability, low interest rates and financial discipline, the high and sustained levels of productivity growth that are essential to long term prosperity. And so today I want to talk today about the drivers of economic growth – skills, innovation, it investment, the enterprise culture itself – and how a modern regional economic policy based on local people making local decisions about local needs can further that.

If we look back on our history there have been three generations of regional economic policy:

The first generation of regional and urban policies – starting in the thirties – amounted essentially to ambulance work – first aid measures, urgently needed assistance and relief in areas of high unemployment.

The second generation of regional policies came in the sixties when then the emphasis was on large capital grants and tax incentives for regions anxious to encourage mobile capital into our regions as inward investment.

And now we are entering a third generation of regional policies, where we concentrate on indigenous measures – strengthening, within the regions, the essential building blocks of self generating growth. And on tackling the imbalances that prevent economic strength:

First, bridging the investment and enterprise gap;
Second, bridging the skills gap;
Third, bridging the technology gap, including support for e-commerce;
Fourth, bridging the employment gap.

Start-Up Rates

Let me give one example.

All around us here in the Nottingham Business Centre we see examples of successful entrepreneurs. But that is not the case everywhere.

Over the last two decades, small business creation rates have varied between regions in a dramatic way.

Start up rates in 1999 ranged from 21 new VAT registrations per 10,000 citizens in the North East to 66 per 10,000 citizens in London. And the rate in the East Midlands was 34 per 10,000 citizens, around half the London rate, below the UK average.

These figures show not only a gap in performance which we must explain but also the potential for each region, not just for business creation but for additional jobs.

If the level of business in every region was the same as the national average there would be 135,000 more businesses registered for VAT across the UK. And as Treasury analysis shows that every extra VAT registration creates on average 3.7 new jobs this would mean around half a million additional jobs in some of the poorest areas of the country.

So we have a long way to go. So the Budget focus on measures to encourage enterprise and entrepreneurship, especially in high unemployment areas and regions of the country, will include consulting on new tax incentives for business development and spurring the enterprise culture.

Research shows that the recession of the early nineties not only destroyed existing businesses but discouraged new businesses – the number of small businesses starting and growing fell by a third and the crisis of confidence continued through most of the nineties.

If we are to achieve higher start-up rates, economic stability is critically important and we need to build from a platform of stability and steady growth. That is why when we came into power we made the Bank of England independent, ensuring that interest rate decisions are taken in the best long-term interests of the economy, not for short-term political considerations.

Inflation is now at historically low levels, long term interest rates are around their lowest for thirty five years and business investment has risen.

Yesterday’s interest rate cut is possible because we have the lowest inflation rate for 30 years and because, in recent years, despite the rise in oil prices we have, with monetary and fiscal discipline, managed to keep inflation under control.

So, through our macroeconomic policies, we are building the best foundation for stability and balanced economic growth throughout Britain.

But stability is a necessary but not sufficient condition of business success. Now that we have greater stability, the next stage is to build through measures that improve investment, innovation, it and infrastructure and skills a stronger enterprise culture. Investment

Because we believe investment in enterprise is the key to success in the new economy, we have cut small companies tax from 23p to 20p, introduced a starting rate of small business tax at 10 pence in the pound, cut mainstream Corporation Tax from 33p to 30p to its lowest ever level, cut Capital Gains Tax to 10p for long term investments and introduced accelerated tax allowances at 40 per cent for small and medium sized businesses and at 100 per cent for it that are of special help to manufacturing.

As we prepare an enterprise Budget we will consider extending Capital Gains Tax relief and the 10p rate, and consult on new reliefs for corporation tax including for intellectual property. And as we move to an enterprise Budget we will consult on Capital Gains Tax relief for the sale of substantial shareholdings, and improvements in our Enterprise Management Incentive scheme, the share options we offer new and dynamic companies.

And to further encourage investment in the regions, where business investment has been rising but not evenly and because one of the gaps is in the venture capital market in regions especially for risk ventures, we are proposing a regional venture capital fund, which will provide early stage venture capital for this region’s growing businesses, the world leaders of tomorrow – providing an estimated £120 million over the next 3 to 5 years. Innovation

The second driver of growth is innovation, which is now, more than ever, the key to higher productivity. It is said that two thirds of new growth comes from innovation and it is our aim to ensure that British inventions are developed in Britain and manufactured in Britain, creating growth and jobs in Britain.

The seedbed is basic science. So we are increasing spending on science by 5.4 per cent a year, including our one billion pound public private partnership with Wellcome to modernise science infrastructure; and to transform British inventions into British-made products, we announced a £60 million pounds University Challenge Fund.

And to encourage an entrepreneurial culture in our universities and technology transfer from the science lab to the marketplace, we are setting up new Enterprise Centres – world class centres, both for fostering commercialisation of research and new ideas and for incorporating teaching of enterprise in science and engineering curricula. And I am pleased that Nottingham is one of the universities that has taken up this science enterprise challenge through the new Institute of Enterprise and Innovation.

And through our higher education reach out funding we encouraging universities to forge links with local communities and to respond to the needs of business. And again universities here in the East Midlands have bid successfully for money from this fund – over one and a half million pounds for Nottingham university and 1.1 million for Loughborough University which I will be visiting later this morning.

And to offer the best incentives for company research, we are consulting on an extension of our new research and development tax credit. Today it underwrites nearly a quarter of small business r&d costs even before a penny in profit is made. Some have suggested we extend this to larger companies and we are interested to hear your views.

Skills

The third driver of growth grows in importance every day: the skills of the people. And in each region we need nothing short of the long overdue revolution in education, skills and training. I thank companies for their support for the New Deal which has given a new start to 50 thousand young people in the region, 25 thousand of whom have moved into work. And here in Nottingham alone 6,000 of the long-term unemployed have participated in the New Deal.

But because we recognise there are special labour market needs in individual towns and cities where we must match the skills employers need to the training of those who need skills we are developing through the Regional Development Agencies and other local and regional bodies, local employment plans – and looking at how to meet future skills and employment needs.

There is also a local action team for jobs in Nottingham operated by Working Links and alliance between the Employment Service, Cap Gemini Ernst and you and Manpower plc, working in partnership with the city council to help people into work.

But our economic future is born in the schools and universities and not only are we increasing spending on education by over five per cent a year in real terms over the next three years but we are investing in your world class universities here in the East Midlands.

We want to make the most of all our nations potential and talent, investing not only in some of the potential of some of our young people, but investing to make the most of all of the potential of all of our young people.

Here in the East Midlands the percentage of sixteen year olds in the East Midlands achieving five GCSEs at grade A-C is just 45 per cent, below the national average and the national target of fifty per cent by 2002. We must do more, so David Blunkett has set up 6 Education Action Zones in the region, partnerships between groups of schools, businesses, parents, and local education authorities. And the New Deal for schools has already helped 1,400 schools in the region. And over the next three years, schools in the East Midlands will receive around 250 million through the New Deal.

And as we start the new millennium, we must equip all our companies and all our people for the newest and most decisive economic challenge of the 21st century – mastering information technologies, from the pc to the internet, from e-mail to e-commerce.

Under our National Grid for Learning Standards Fund, Nottingham was allocated a million pounds this year to invest in information technology and next year spending will be £1.3 million.

The proportion of businesses in the East Midlands region that either have a website or frequently use e-mail has increased significantly from 54 per cent in 1999 to 76 per cent last year.

But further progress needs to be made Only 24 per cent of businesses are trading online. And in terms of increased access to the internet at home the region still lags behind with only 23 per cent of homes connected.

So the region will benefit from our £1.7 billion plan for a computer learning centre in every community, 1,000 in all throughout Britain. And they will be in schools, colleges, libraries, in internet cafes and on the high street.

In the first phase, 19 centres will be located in the region and run by numerous providers, including local community groups. And two of these are already open here in Nottingham.

Our targets for the new economy are ambitious. Within three years, thousands more small businesses able to benefit from e-commerce. A whole new network of computer learning with one purpose only, that the whole region is equipped for the information age.

Infrastructure And Transport

The fourth driver of regional growth where we need to do more is improvements in infrastructure – tackling a long term under-investment by doubling transport investment immediately and then through a unique private public partnership investing £180 billion pounds over 10 years to improve motorways trunk roads, and rail services.

The Private Finance Initiative is also helping to modernise public services in the East Midlands with over £76 million worth of PFI investment in the region – including a project worth £20 million at the Queen’s Medical Centre here in Nottingham – since 1997 and over 450 million more in procurement.

Enterprise Culture

Finally, let me turn to the other great driver of growth- the enterprise culture. Survey evidence published by the London Business School yesterday shows that while 1 in 10 people in the US are trying to start a new business, only 1 in 33 are in the UK. The gap in activity is particularly noticeable among women – currently under-represented in both self employment and business start-ups, particularly in comparison with the US: less than a third of those registered as self-employed in the UK are women and only 35 per cent of new enterprises are run by women. And again there is variation by region – in some areas fewer than 20 per cent of those who are self-employed people are female. Here in the East Midlands the figure is 29 per cent.

Last year’s global entrepreneurship monitor found that UK start-ups would rise by fifty per cent if the start-up rate amongst women matched that of men.

So that is why we must act to encourage more women to start and to grow their own businesses.

Already there are innovative projects in place that we can build on and learn from-

In Glasgow, the Wellpark Enterprise Centre, providing information, advice and business support to women either in business or wanting to go into business, as well as a resource centre and on-site nursery.

In Norwich, the Women’s Employment, Enterprise and Training Unit – offering a range of services to keep women informed and to enable them to improve their prospects of finding employment including enterprise courses and access to loan funds.

And WIN – Women In the Network, active in Scotland and the North East providing support, including on-line support for women starting and developing their own businesses.

Among our measures to promote entrepreneurship amongst women is the £96 million pound Phoenix Fund which has already allocated a substantial amount of money to a number of projects aimed at helping women start up businesses, and we will build on this in the spring when the Small Business Service will be launching a new women’s online business centre.

And let me turn specially to the challenge faced in some of our high unemployment areas where business creation has often run at one sixth of the wealthier cites and towns.

In high unemployment areas economic prosperity will not come from a return to the old ways which have failed: neither an old style benefits approach which has ignored the causes of poverty and unemployment – and not invested in education, training, jobs and business development. Nor a bricks and mortar only approach which, with enterprise zones, targeted subsidies for property development at the expense of help for enterprising local people.

To tackle the causes of unemployment and low economic activity, we need a radical new approach encouraging business development and an enterprise culture and I am pleased that with us today is Sir Ronald Cohen whose Social Investment Taskforce report on stimulating enterprise and investment in disadvantaged communities is the subject of my pre-Budget consultation.

Instead of acquiescing in the old giro culture – simply paying benefits to compensate people for their social exclusion – we must back success rather than accept failure. And to do that we must extend fiscal and other financial incentives that open up economic and business opportunity in high unemployment areas, and encourage and reward new enterprise.

Indeed, our old cities and estates should be seen as new markets with competitive advantages – their strategic locations, their often untapped retail markets, and the potential of their workforce.

And so it is right to put in place the best possible incentive structure to stimulate business-led growth as well as much bigger flows of private investment.

To spur economic activity, we are proposing a number of new incentives.

First to secure development, we are proposing stamp duty exemption for all properties in our most disadvantaged communities;

Accelerated tax relief for cleaning up contaminated land;
Vat cuts to reduce the costs of residential property conversions;
Tax relief to bring empty flats over shops back into use.
And we said we would consult on:

A further business rate relief for small business in assisted areas;
And to secure new business development particularly by reducing the cost of raising money . We are discussing with the banks and considering a new and generous tax credit for community investment;
And the creation of the first community development venture fund.
And we are going beyond this: not just micro-finance for enterprises who cannot access mainstream sources of finance but advice and a national network of mentors to give entrepreneurs all the help and encouragement they need.

Anyone anywhere who seriously wants to start a business will be able to get a free package of advice, information and access to mentoring through the Small Business Service, worth up to £500.

And in the high unemployment areas of the country, we will support intensive programmes of pre-start training, advice and mentoring, with new incubator units in every region. A package worth up to £2000 for every start-up.

The Regional Development Agencies and the local authorities can also make a vital contribution to fostering an entrepreneurial culture. And I pay tribute today to the work of Derek Mapp, an entrepreneur himself and the Chair of the East Midlands Regional Development Agency.

As we enter this new generation of regional policies strengthening, within the regions the essential building blocks of self-generating growth, the capacity to innovate, invest, build skills, match the unemployed to jobs available, we are offering development agencies new flexibilities, but in return we are demanding strenuous targets be met in skills, innovation, business creation, new technology and employment. This is the new regional policy – locally sensitive and locally delivered, local people meeting local needs through local agencies.

But changing our culture to one that favours enterprise in every area needs not just incentives but a real shift in attitudes too. And that will come about quickest if it starts, not in the boardroom, but in our schools.

I know how many schools and businesses in this region are making headway in advancing the enterprise culture but I want every young person to hear about business and enterprise in school; every college student to be made aware of the opportunities in business; every teacher to be able to communicate the virtues and potential of business and enterprise. And I want businessmen and women to visit our schools and talk to their enterprise classes; I want every student to have a quality experience of working in a local business before they leave school. I want management training scholarships to be available even in the poorest areas and I want every community to see business leaders as role models.

Conclusion

So the 2001 Budget – and our future plans – will continue this Government’s policies to offer greater incentives to business, remove unacceptable barriers that prevent people with enterprise getting on and, from the classroom to the boardroom, widen and deepen the spirit of enterprise. We can and must do more. So in this and in other areas in this pre-Budget consultation we welcome your views

I believe that out of our discussions will emerge an even stronger consensus on the need for both stability and for higher investment in skills innovation technology and our infrastructure. And on the need for a strong enterprise culture. Out of dialogue consensus, and out of dialogue and consensus, a stronger partnership, working together for our shared goal – a more prosperous East Midlands and a more prosperous Britain.

The speech made by Gordon Brown, the then Chancellor of the Exchequer, in London on 26 February 2001.

1. Why children, why now?

From here in London, Clare Short and I want to welcome and thank all of you who gather here today from every continent — leaders of global organizations and of Governments — each with your own proud history and traditions, each with your own unique record of service and commitment, who have come together because of :

• our shared concern: for the many millions of the world’s children who live on the knife’s edge of bare existence;
• our shared indignation: at the senseless tragedy of young lives lost to disease and despair
• our shared belief: that the future we want for our own children is also what we want for all the world’s children;
• and most of all because of our shared conviction that what can be achieved together by unity of purpose is far greater than what we can ever achieve acting on our own.

It is by putting the needs of the young and the poor not only at the centre of social policy but at the centre of financial decision-making, economic policy  and international diplomatic action, we can ensure a better future – a future of health and hope – in which no child is left behind and every child, in every country, has the opportunity to make the very most of his or her abilities.

Yet today we can predict with grim precision that as long as children’s needs are seen as incidental and not integral to what we as Governments do; as long as they are a part and not at the heart of all policy decisions we make; each and every day of this year 30,000 children will lose the fight they are waging for life.  Seven million children will perish before reaching their first birthday.  Over ten million will die before the age of five.

And let us not equate mere survival with strength: in the developing world, 150 million children are underweight, at severe risk to their mental and physical development.  Worldwide, 120 million children go without even five years of schooling, their chances crippled by disease, natural disasters and war before life’s journey has even begun.

This is the face of poverty today in the places and among the people left behind – staggering, disfiguring, galling, grinding poverty: the face of global poverty is the face of a young child.

And it is an affront to our basic belief in the equal worth, and inherent potential, of every human life.  It is a challenge to the values at the core of our character.

Those of us in the developed world, many of whom are enjoying unprecedented plenty, must regard poverty on this scale not only as an economic challenge, but also a moral imperative of the highest order.

I agree with those who say that good times are as stern a test of character as bad times.  In this era of prosperity, more than ever, the world’s children must become our cause.

In that spirit, let us start by paying tribute to the powerful example set by Nelson Mandela and Graca Machel.  No two individuals have done more to speak up for the future.  And when Nelson Mandela tells the children of the world —

‘If I could promise you every one of your days will be a day of leaning and growing, I would but I promise you what I know I can deliver: to work every day in every way to support you as you grow’;

And when Graca Machel says —

‘I have seen how one year of school changes a child … I have seen a generation of children armed with education lift up a nation’;

Then we know that, as we approach the UN Special Session on Children this September, these two leaders are inspiring – and Carol Bellamy and Unicef and UNDP are assembling – a new global partnership for children so wide, so powerful and so determined that no obstacle should be allowed to impede its    path of progress.

For if this is a moment of urgency, it is also a moment of profound opportunity.

Today we are also privileged to be hearing from Horst Kohler and James Wolfensohn, who have just returned from a pathbreaking trip to Africa…

• who heard the clarion call of an extraordinary coalition of faith groups, NGOs and multilateral organisations…
• who together brought the world’s richest nations to whom so much is given, and the world’s poorest nations whose needs are greatest, into a unique alliance to tackle debt and poverty – an alliance whose work, even as the first 22 countries secure debt relief, has only just begun.
• leaders who because they recognise the need for  a virtuous circle of debt relief, poverty reduction and sustainable development, have, along with Kofi Annan, the United Nations, Unicef, and UNDP, committed themselves to an historic joint declaration from which there is no turning back.

It is the first official joint declaration of the IMF, World Bank, OECD and UN that ‘poverty in all its forms is the greatest challenge to the international community.’

It is a resolution to work together to meet the 2015 development targets, not least:

• halving the number of people living in  poverty;
• enrolling all children in primary school;
• and reducing by two thirds infant and child mortality rates.

and it is a partnership against poverty which to succeed will demand new and concrete commitments;

and the purpose of this conference today is to examine the detailed means of reaching these goals.

2.  The purpose of this conference – a call to action

First, if we are to realize our shared goals we must embrace our shared responsibility – by setting out the practical steps each partner must take, for ends  will mean precious little without the means to achieve them.

Too often, the world has set goals like the international development targets of 2015 and failed to meet them.  Too often, we have set targets, reset them, and reset them again, so that our ambitions, in the end, outdistance our achievements.

Indeed, though our targets are achievable, we are already in danger of missing the mark.  Projecting forward, we can see our trajectory will fall far short on education, on health, on poverty.

So it is not enough that we have made a pledge.  As Mr Mandela and Ms Machel have written: ‘please hold us to it.’  theirs is a simple and powerful plea for the accountability we all must demand of ourselves  and demand of one another.  For if the sum of our actions amounts to no more than its parts, we will be fated to ask ourselves, in the year 2015, ‘why did we fail?’

If the worldwide debt campaign has taught us anything it is that we advance only if we advance as one.  For we are not powerless individuals, but together have power.  We are all rich and poor, old and young bound in one vast network of mutuality, across all the lines that might otherwise divide citizens of different countries, perhaps, operating from a thousand different centres of energy, conscience and conviction, but members of the same global community, the same moral universe.

Because our shared responsibility does not diminish our individual accountability, our conference must have a second purpose.  We must not only set ourselves on a specific course of action, but each of us as partners must be prepared to make radical changes in the way we act so that the goals of 2015 can be achieved.

Marching with us are not just the memories of those who lost out when we have failed in the past but the hopes and expectations, the dreams and ambitions, of millions of young people who look to us for the future.  And their voices must be heard too.

And so as the UK Government we make this declaration: that as we discuss with all of you how to meet these 2015 goals, we will be ready to reshape our policies, adjust our expenditures, and refashion our priorities so that the actions of each of us make possible the attainment of the goals set by all of us.  And we ask all other participants to do likewise.

Here in Tony Blair’s Government, Clare Short has been a true leader in changing the UK approach, crafting concrete, comprehensive policies for the problems of global poverty; increasing her aid budget by 2004 by 45 per cent in real terms, and untying all our development aid; ensuring that development assistance be directed to country-owned and community-driven poverty reduction strategies; renouncing Britain’s right to benefit from any of the highly indebted poor countries; bolstering conflict prevention with a new Africa fund and by banning for 62 countries export credits for unproductive expenditures; and because growth through trade is one of the best means of lifting people up, committing with all EU states to open our markets to all products made in the least developed countries, and to strengthen their voice in the WTO.

And today we hope that in our declaration each of us can move forward –  making new commitments that ensure that the work of each institution enhances the work of the other, and that the whole of our actions becomes greater than the sum of our parts.

Commitments from –

• the IMF and World Bank: that the detailed commitments in the poverty reduction strategies, including targets to reduce child poverty, will be implemented in practice at the centre of economic and financial policy;
• from the UN family: to support developing countries in making health and education a priority;
• from developed countries: to increase and untie their aid commitment, and to open their markets;
• from developing countries: to create community-driven poverty reduction strategies and make them the centre of economic policy;
• and from NGOs and faith groups: to coordinate their efforts in giving voice to the voiceless and empowering the powerless.

4. A call to action — to create the virtuous circle

And today as we issue our call to action, a call that we hope will be heard   and heeded by all Governments, and resonate far beyond these walls and these borders, there are two areas on which action is imperative: education and health in the world’s poorest countries.

First, we know that education is a precondition of progress personal and national – the very best anti-poverty strategy, the best economic development program.  There is simply no better means to empower the powerless, to put their future directly in their hands.  Education should be the birthright of every child.

The case for investing in primary education is unanswerable and remains mostly unanswered.

In the past decade, primary enrolments have increased at twice the rate of the 1980s.  Still, tragically, 130 million children do not attend primary school.  two-thirds of these are girls. Almost half of all African children and one-quarter of those in South and West Asia are being denied this fundamental right, this basic root of all opportunity.  It is little wonder, then, that 900 million people over the age of 15 are illiterate – one sixth of the world’s population.

Public expenditure per pupil, in the 19 least developed countries, is less than $40 — compared to $200 per pupil in developing countries, and $5,300 in more advanced economies.

So there is more we must do; and that approach must begin with aid.  Since 1997, the UK has increased its commitments on education by £500 million.

But no aid budget, and no one nation, can achieve enough on its own.  And because multilateral action is essential, it is crucial that honoured in action is the commitment made by 180 countries at the World Forum on Education at Dakar to achieving quality basic education for all, with a special emphasis on education for girls.

And we must build on that commitment, as Graca Machel agrees, extending into the refugee camps and even beyond the confines of the camps into the areas of conflict themselves, helping ensure that one day, not even war or its aftermath will be an excuse for denying a child his or her basic human right of a decent education.

I know that with Prime Minister Amato addressing us by video link, and Finance Minister Visco speaking to our lunch, Italy, president of the G-7, has a new proposal for world wide action; and I am also pleased to announce that the British Government will create, in Her Majesty the Queen’s Jubilee Year, a fund to speed the introduction of universal primary education in the Commonwealth.  It is a fund to help the 75 million children in Commonwealth countries who lack a basic education, by building fair and effective education systems and creating new opportunity for girls and disadvantaged groups.  And we will call on business to support this effort.

We must also act – every bit as swiftly and purposefully – on health.

We know that the poorer the family, the less healthy the child. And we well know the cost, human and economic, of infectious disease in developing countries.  Diseases like malaria, tuberculosis and diarrhoeal diseases kill 8 million children a year.  In South Africa, Botswana and Zimbabwe, half of all 15-year olds are expected to die of aids.  In sub-Saharan Africa, where AIDS is the leading cause of death, AIDS will cut the GDP of some countries by 20 per cent.

These are dread diseases. But let us not forget that they are also preventable.  This knowledge shames us even as it spurs us on:

• as much as half of all malaria deaths could be prevented if people had access to diagnosis and drugs that cost no more than 12 cents;
• a quarter of all child deaths could be prevented if children slept beneath $4 bed-nets.  In Africa, only one per cent of children do;
• millions of lives could be saved by TB medicines, which are 95 per cent effective and cost as little as $10 for a six-month treatment;
• and millions of cases of HIV could be prevented through well-targeted, low cost prevention and care strategies.

Where these strategies have been implemented, they have brought results.  The latest UN figures show that however limited their resources, poor countries that make treatment and prevention a priority can stem the spread of HIV and AIDS as Uganda, Thailand and Senegal have, and cut TB deaths by 50 per cent, as China, India and Peru have.

There is more that developing countries can do to reduce disease and despair; yet there is a natural limit imposed by their ailing economies.  The countries that most urgently need to devote more resources to health care are the countries that spend the least on health care.  For example, in 1999, per capita health spending in sub-Saharan Africa amounted to $86 — a mere fifth of the world average.

So there is more we must do; and, again, we must do it together.  Ours should not be isolated interventions; everything we do must mesh with current efforts to improve health.  This government has today issued a paper on the merits of a comprehensive approach.

And today, on behalf of the British Government, Clare and I are pleased to announce two new proposals to improve health in the countries hit hardest.

First, where only 10 percent of all biomedical research is devoted to diseases that overwhelmingly affect the world’s poor, we will create new tax incentives to accelerate the research done on diseases like AIDS, TB and malaria.

I am further prepared to match that tax credit for research done in the United Kingdom with a tax credit for research done elsewhere.  But such a proposal must be met by a corporate commitment to create new drugs and vaccines in ways that truly meet the needs of the poor and sick.

And if the pharmaceutical companies were prepared to increase the availability of treatments on a pro bono basis – treatments that are genuinely needed – we would be prepared to match that commitment by considering it as a tax deduction.

Second, a purchase fund – providing a credible commitment to create a market for current and future treatments in developing countries – would surely serve as a strong incentive to develop and deliver affordable treatments.

That is why, in a joint effort with Italy, the President of the G-7, the UK proposes that a new global purchase fund for drugs and vaccines be created.  Both for treatments that do not yet exist but could be developed in time – for AIDS and malaria, for example – as well as for those that already exist and need to be purchased now.

Again, I call on the pharmaceutical companies to join us.  I call on them to step up to their responsibility – to recognize the scale of the challenge we face and to respond on an equal scale, by developing and delivering affordable treatments for the world’s poor.  Because, quite simply, we cannot save lives and raise hopes without their commitment.

Conclusion

Our purpose, Nelson Mandela has said, ‘is to get specific commitments… and specific results.’  And if we can do this in the world of tomorrow, countries can be defined not by land mass or military might as in the past but by the health and the achievement of new generations: the truest test of our progress is that a mother in sub-Saharan Africa can give birth without fear; that a child in South Asia has sustenance and shelter; that a young man or woman possesses the tools and skills and education it will take not only to live, but to thrive, in the 21st century.

And so here in 2001,

• led in our efforts by Nelson Mandela and Graca Machel;
• summoned to act by the cries of children;
• indeed inspired by the children I have seen in Jakarta living above open sewers, yet with eyes still bright with expectation and hope;
• moved to action by school-pupils in Uganda who we will hear about today, who because of debt relief will now see classrooms with roofs, schools with teachers , and school lessons with  books;
• shocked into even greater action by aid worker after aid worker describing mothers fighting to save the lives of their newborn children and, in that struggle, losing their own lives too, avoidable tragedies multiplied a million times over;
• encouraged by the new commitments by the IMF and World Bank and the UN family;
• and inspired by charities, churches, and companies who are engaged as never before.

We can see what the world – firm of heart and united in spirit – can do and will do – not as isolated acts of charity, but as wave upon wave of caring, collective endeavour, and compassion in action … flowing from this moment, and this year, to 2015 and well beyond.

From London in February to Washington’s IMF and World Bank meetings in April, from Genoa’s G-7 meetings in July to New York’s UN Children’s Summit in September, at every moment, our thoughts are on and our inspiration drawn from the needs of children in Jakarta, Bangladesh, Uganda, and anywhere and everywhere that poverty and injustice exists, so that we will achieve our goal, the goal of decent minded people everywhere in the world, that no child is left behind.

The speech made by Gordon Brown, the then Chancellor of the Exchequer, on 26 March 2001.

Today I am pleased to announce the starting project in the second stage of the new deal, the first sectoral employer-led new deal initiative: 5,000 new job opportunities in IT.  Companies that will lift unemployed men and women from the dole to jobs typically paying between fifteen and twenty thousand pounds a year.

Today’s new ambition IT initiative, which will be followed by further employer-led sectoral jobs initiatives in coming weeks, involves our leading computer and IT companies: Cisco Systems, FI Group, IBM, Siemens, Consignia, Cap Gemini, Ernst and Young, Dixons, ICL, EDS, RM plc, Oracle, BT and Microsoft, and we are grateful to all of them for joining this new and exciting partnership for jobs.

In total over 7500 New Deal recruits will benefit from training with these top computer companies in IT skills.  These will be primarily long term unemployed men and women, who have been out of work for 18 months, but they will also include young people unemployed for six months or more and lone parents seeking work, all now offered new, flexible IT training through the New Deal.

Ambition:IT is the smart solution for business looking for skilled employees and for the country as a whole: it gives hope to the unemployed, tackles skills shortages and shows us preparing for the new economy.  In five years’ time, 90 per cent of jobs will need IT skills, compared with 70 per cent today and just 25 per cent in 1992.  So Ambition:IT matches unemployed men and women without jobs to the businesses that need skilled IT technicians, a demand that itself is set to increase by up to 25 per cent in the next three years.

And there will be special emphasis  on lifting up high unemployment areas which exist  side by side with areas with IT vacancies in every part of the country. The 10 areas short listed for the pilots – from which five pilot areas will be chosen – are London, Manchester, Birmingham, Leeds, South Yorkshire, Liverpool, Tyneside, Cardiff, Glasgow and the Edinburgh and Forth area.

In addition to Career Ambition – this three year pilot programme to help long-term unemployed people and lone parents to access technician jobs in the IT industry, First Ambition will provide greater opportunities for long-term unemployed and lone parents to take up ICT training – putting 15,000 people onto European Computer Driving Licence or equivalent courses in the first year of the programme  – and Challenge Ambition will allow New Deal providers to bid for resources to try out innovative ICT solutions.

With Ambition:IT launching the second stage of the new deal and the new regime of new  rights and new responsibilities of ambition, we are investing – in total – 50 million pounds,  but based on our  ‘Employment first’ principle – from April 1st  tightening up sanctions so that  long term unemployed meet their obligations to seek work and in this way  move closer to our ambition of full employment, employment opportunity for all.

So employment first means, for unemployed claimants, a new compulsory skills check up and a pilot project requiring skills training by the unemployed; for lone parents, new options including self employment backed by child care with all now  invited to a work based interview; and for the 140,000 long term unemployed over 25 and under 50, new opportunities in wider access to training and self employment as well as jobs, but  new  obligations with  sanctions that will now include the withdrawal of benefits for up to 26 weeks for  repeatedly refusing to respond to the new opportunities.

In the next few weeks we will be launching further employer-led initiatives including in construction, hotels and hospitality and financial services. So having asked Tessa Jowell to speak, I will then pass to the employers at the centre of the initiatives – Sandy Leitch, chair of the New Deal Taskforce and Hilary Cropper of FI group who will chair the Ambition: IT steering group.

The speech made by Gordon Brown, the then Chancellor of the Exchequer, in London on 24 April 2001.

Here in London in 1991 – just two years after the fall of the Berlin Wall – representatives of countries from across the world met at a moment of great opportunity and profound challenge; conceived a plan to break down the barriers that had – for too long and at too great a cost – held back the countries of eastern and central Europe; and set out a bigger vision, that by ensuring the benefits of open markets, free trade, economic stability and sustained growth were shared not just by some of Europe but by all of Europe, they would end centuries of division and create one Europe.

With the European Bank for Reconstruction and Development today playing a vital role in twenty six countries, and recently welcoming Yugoslavia as its twenty seventh country of operation, we can congratulate the staff on ten years of achievement, welcome our distinguished new President Jean Lemierre to his first Annual Conference as President and thank him for setting out his vision, and look back on the first stages of the task: on a decade which ended with, for the first time since the fall of the Berlin Wall, all countries of central and eastern Europe growing and has seen foreign direct investment rise to a record annual inflow of 21 billion dollars, bringing the total since 1989 invested in central and eastern Europe to almost 95 billion dollars.

Greater stability, increased trade, higher investment and economic growth for many countries in eastern and central Europe.  But, because it has also been a decade of financial crises in Russia and declining output in the countries of the former Soviet Union, with millions suffering economic and social upheaval, we must now confront the challenges of the next decade and resolve here from London – on this tenth anniversary – that we will – not least by improving the transparency, effectiveness, and partnerships of the bank – step up reform, building strong financial sectors; promoting enterprise economies; investing in infrastructure and environmental improvements; building the clean modern transport and energy services that people and businesses need; and creating a culture that supports long term investment, through effective legal and regulatory frameworks, strong corporate governance, tackling corruption; and work with the World Bank and others to help those who have suffered social and economic upheaval.

We meet today at a time of more challenging conditions in the global economy.

With the United States today experiencing a necessary slowing, Japan barely growing, and some key emerging markets experiencing renewed instability, the growth rate in the world’s major economies this year is expected to halve while the world still faces volatile oil prices.

We know that in today’s world of instantaneous global markets, instability anywhere has repercussions everywhere.  The faster the speed of international financial flows, the greater the need for international and national vigilance by each and every country.

So I want to talk today about the action we are taking to steer a course of stability and sustained growth;  why I believe, at a time of slowing world economic growth, this is a moment not for retreating from global economic cooperation or losing faith in its efficacy and turning inwards, not to retreat into protectionism but a time for enhanced global cooperation and for recognising that while in recent years America has been the engine of growth in the world economy, Europe must also show a leadership role.

I believe that as we meet together in Washington this weekend the approach of all of us should be forward looking and outward looking: all countries affirming they will take all the actions necessary to sustain growth.

And I believe that all countries should commit to support the international action necessary for world growth – opening up trade, maintaining the momentum on reforms of the international architecture, and refusing to ignore the needs of developing countries and the benefits to all from their engagement in the global economy.

This requires short term and long term action at both a national and international level.  But while we are better placed to face global risks than before, with generally low inflation – G7 inflation today averages 2.4 per cent, compared with 5 per cent in 1990 and 13 per cent approaching the downturn of the early eighties;  stronger public finances – despite Japan’s position G7 deficits are close to zero  where they were 3 per cent of GDP in 1990 and 4 per cent approaching the early 80s downturn.  I believe that it is the duty of each and every country to put in place clear and transparent frameworks for monetary and fiscal policy – frameworks that command market credibility and public trust, but allow the discretion and decisive action necessary for effective economic policy.

In Britain we will remain vigilant and never be complacent, by standing firm in the face of short term global risks, to –  as I said in my Budget – steer a course of stability through the ups and downs of the economic cycle.  No country can ever insulate itself from world economic events but it is because of the tough and decisive action we have taken – introducing tough fiscal rules and reducing the national debt, making the Bank of England independent and its success in delivering the lowest inflation for 30 years – that British economic policy is much better placed than it has been in the past in the face of global instability and we are on course to continue to deliver stability and sustained growth.

Where Foot and Mouth Disease has caused problems for the agriculture, rural and tourist sectors, the Government has acted decisively to offer support.

It is an extremely difficult time for individuals and communities when jobs are lost as industries restructure in the face of change and it is even more frustrating – as today – when these losses arise because of global managerial decisions based on financial problems in one sector despite the high productivity performance of the British employees.

For workers in Motorola and other companies we will make sure that for each and every employee there is direct and immediate government support to find jobs.

And we will continue to steer a course for stability and growth in face of the short term global risks and by strengthening the New Deal and help with training build on the 1 million new jobs we have created since 1997.

What we will not ever do is go back to the old days where there were inadequate  fiscal and monetary disciplines and public investment was cut back and stability put at risk by irresponsible tax cuts we could not afford.

So in the UK we have stood firm, taking  tough and forward looking action on monetary policy and sticking to our long term spending and investment plans, and we will continue to act as necessary to promote domestic demand growth, open trade, investment and employment opportunity for all.

Each continent has its role to play:

• in Europe, Finance Ministers and Central Bank Governors must work to ensure that the euro promotes stability and growth. And Europe must now implement reforms to its capital, labour and product markets;
• in the United States, I know that the US Federal Reserve will continue to take the vigilant and decisive action it judges necessary, as growth slows, to sustain confidence and domestic demand growth;
• in Japan, policy must be focussed on stimulating demand and the authorities must move ahead with reforms to strengthen the financial sector.

Trade

And every continent must play its part in extending trade, ensuring no return to protectionism.

Europe accounts for sixteen per cent of world trade, more than the United States. We must use this position of strength to press for the further extension of trade. The path of open trade and open capital markets that we have travelled in the last 30 or 40 years has brought unprecedented growth and greater opportunity.

Over the last thirty years, world trade has increased from around $300 billions to over $5000 billions, a 15 fold increase ; the amount of international capital from around $600 billion to over $8000 billion, a 13 fold increase. And foreign investment has increased from around $10 billions to over $600 billions, a fifty fold increase.

This has been matched by a dramatic increase in world output – from $3000 billion to over $30,000 billion; average income has increased from $3,600 to $5,200 per head; and the proportion of people living in poverty has declined from 30 to 24 per cent in just the last ten years.

So we reject those that point to the instability of recent years and argue we should turn our back on globalisation, in effect a return to the protectionism of the 1930s and tightly controlled capital markets of the 1940s; as I reject those that look at the expansion of private capital flows and argue there is no longer a need for the IMF and World Bank suggesting  we should return to the discredited laissez-faire of the 1930s.

Instead we should through international cooperation press ahead for further trade liberalisation.

But as DFID’s recent white paper sets out, globalisation must be made to work for the poor.  I therefore welcome the EU plan to eliminate all EU tariffs and quotas on imports from the 49 least developed countries through the ?everything but arms initiative?. But more progress needs to be made. It is time for the EU to call again and to work actively to support the launch of a comprehensive new trade round under the World Trade Organisation. The Uruguay Round brought global benefits of more than 200 billion dollars per year. And it is estimated that a new Round could deliver welfare gains twice that size.

But we also recognise there can be no complacency. With many countries still excluded from the global economy and well over a billion people unnecessarily and unfairly trapped in extreme poverty – their lives today ruined by hunger and the constant struggle to survive – there is an urgent need for further reform.

Two years ago the world came together in response to the international financial crises and agreed a far-reaching programme of reform. Today, as we face new challenges in the global economy, we must ensure we meet those high hopes of 1998. The Spring Meetings this week in Washington will be a critical test of our resolve.

Helping each and every country put in clear and transparent frameworks to promote stability and strong public finances;

• helping each and every country implement the structural reforms that are necessary to make markets work better and secure prosperity for all;

putting in place new mechanisms for crisis prevention, to minimise the instability of the global economy and to ensure problems are tackled at an early stage;

• building a new virtuous circle of poverty reduction and sustainable development, to ensure we meet our obligation to halve world poverty by 2015.

Indeed our task is to put in place the new international framework for global stability, implement new rules of the game that effectively and fairly meet the demands of the new global market place – open not sheltered economies, international not national capital markets, global not local competition. This new framework must be grounded in new rights and responsibilities, enshrined in new disciplines and rules that are agreed nationally and applied internationally.

Private sector involvement

We have made real progress in finding ways to meet the demands of increasingly integrated capital markets. In place of the old approach which focussed on crisis resolution, whereby only crisis triggered intervention to tackle economic problems, we are putting in place a modern system of crisis prevention.

We have sought a way between, on the one hand, encouraging moral hazard and uncertainty by allowing investors to expect an implicit guarantee for private investment, and, on the other hand, adopting an inflexible approach which could threaten investment and encourage the very instability we want to prevent.

But moving from a world of ad-hoc crisis resolution to one of crisis prevention and containment demands that all actors play their part in maintaining stability. For the private and public sectors this means adopting new responsibilities, but responsibilities matched by new rights and expectations.

For private investors, this means new responsibilities to stay engaged at times of crisis and a strong presumption that official support will be matched by a contribution from the private sector.

But this responsibility to participate in maintaining a stable financial system also demands new actions and commitments from national governments and from the official sector as a whole to establish the presumption of private sector involvement in a fair and predictable manner.

The responsibility of private investors to share fairly the burden with the official sector should be matched by the right to expect fair and consistent treatment by the official sector in times of crisis, and to be kept informed by national governments and through reliable, transparent and comprehensive surveillance from the IMF.

The official sector has made progress in delivering greater clarity through a framework of principles and tools for involving the private sector in the orderly resolution of crises.

We now need to reaffirm our commitment to continuing the development and implementation of that framework to deliver still greater clarity and predictability.

The official sector has a responsibility to go further in reinforcing a clear set of presumptions that private sector involvement will be at the centre of crisis resolution, moving further away from the old ad-hoc model while retaining the flexibility needed to deal with individual cases. It is critical that we now agree to take decisions in a way which is consistent with the overall framework to ensure that we shape expectations and send the appropriate signals and so establish and operationalise the presumption of private sector involvement in crisis resolution.

Codes of conduct and enhanced surveillance

For national governments there are also new responsibilities to comply with internationally agreed best practice in policy-making – to put in place credible macroeconomic frameworks, robust financial systems and transparent procedures which can lead to more discerning flows.

We have agreed a framework of codes and standards covering the key areas that all countries need to address if they are to achieve stability and participate in the international financial system – transparency in fiscal and monetary policy, financial supervision and corporate governance. And I hope at the Spring Meetings we can extend this framework to strengthen the fight against financial crime.

But the codes of conduct will only work if the private sector is aware of them and the information they provide. This requires a transparent, effective and authoritative surveillance mechanism to monitor their implementation.

The IMF and World Bank are making progress on the assessment of codes. The IMF has completed over 100 country reports on the observance of standards and codes, and will complete well over 100 more during the course of this financial year. I hope all countries can agree on the value of these assessments.

For the new approach to be fully effective, there must also be a step change in the IMF’s Surveillance under Article IV.

• It must become broader encompassing not just macro economic policy but the implementation of the codes and standards on which stability depends. It must also become inclusive, drawing on the work and expertise of the World Bank, and regular consultation with the standard-setting bodies.
• It must also become transparent so that the public and the markets get the information they need and have confidence in the process which produces it. There must also be a step change in providing countries with the support they need to adopt codes and standards, and strengthen their financial sectors.

Having worked to establish a framework of codes and standards, it is essential that we work closely with developing and lower income countries to help them meet these benchmarks and access international capital markets from solid foundations. Technical assistance and support is crucial to ensure that no country is left behind in our efforts to raise standards globally.

The UK will soon announce the details of a multi-million pound facility for technical assistance to enable developing countries to meet these international standards. The assistance fund will be used to enable poorer countries to access technical advice and receive training in order to implement internationally-agreed standards in transparency, policy-making and financial sector supervision and management.

I urge other members of the international community to take similar steps.

Greater IMF and World Bank cooperation in tackling the barriers to stability and growth

The new global economy demands new ways of working at the IMF and World Bank, to deliver both the macroeconomic and structural reforms on which stability and growth depend.

We know that macroeconomic problems sometimes result from poor macroeconomic management or inappropriate exchange rate regimes. But we also know that to focus on good macroeconomic policy making is a necessary but not a sufficient condition for stability, and for sustainable growth.

As we have learned in recent years, macro-economic imbalances are often a reflection or symptom of underlying structural problems, of weaknesses in financial supervision, poor fiscal management and fiscal control systems, low savings and investment and infrastructure, barriers to trade which depress growth and which deepen poverty.

We need to ensure the conditions in IMF programmes are more effective. We recognise that programmes will be most effective if there is genuine country ownership. The IMF must not be seen to be micro-managing national economic policies. This requires that we streamline the conditions in programmes.

But at the same time streamlining IMF programmes must not mean simply focusing on macroeconomic conditions. There is a vital need to address both structural and institutional conditions. It is not simply that macroeconomic and structural conditionality has to go hand in hand. It is that we often need to tackle structural problems in order to deliver sustainable macroeconomic outcomes. This means the IMF and World Bank must work together on the design of programmes.

At the Spring Meetings, I will be urging the IMF and World Bank to develop together a set of principles which can guide our approach to streamlining programme conditions in the future. They should test these principles not only by looking at how they could be applied to current programme design, but also look at how they would have affected programmes in the past. The principles must ensure that programmes address long-term structural issues. They should underpin a new approach to programme design, based on much closer collaboration between the IMF and World Bank.

Building the virtuous circle of debt relief, poverty reduction and sustainable development

The need to develop a new approach is clearest for the poorest countries.

To achieve our goal – halving by 2015 the proportion of people living in extreme poverty – we must break the vicious circle of debt, poverty and economic decline and create a virtuous circle of debt relief, poverty reduction and economic growth.

Last year Horst Kohler and Jim Wolfensohn, along with the United Nations, UNICEF, and UNDP, committed themselves to an historic joint declaration from which there is no turning back.

It is the first official joint declaration of the IMF, World Bank, OECD and UN that ‘poverty in all its forms is the greatest challenge to the international community.’

It is a resolution to work together to meet the 2015 development targets, not least halving the number of people living in poverty, enrolling all children in primary school and reducing by two thirds infant and child mortality rates.

And it is a partnership against poverty which to succeed will demand new and concrete commitments.

Too often, the world has set goals like the international development targets of 2015 and failed to meet them. Indeed, though our targets are achievable, we are already in danger of missing the mark. Projecting forward, we can see our trajectory will fall far short on education, on health, on poverty.

It for this reason that Clare Short and I hosted an international conference in London earlier this year, bringing together a unique assembly of key global actors – Finance Ministers and Heads of the international financial institutions meeting with Development Ministers, UN Agencies and representatives from developing countries and NGOs and Civil Society.

At the conference we all acknowledged the urgent need for action and for collective effort. What emerged from the meeting was the realisation that we must all – – individual governments, multilateral institutions, the private sector, and non governmental organisations – be prepared to make radical changes in the way we act so that the goals of 2015 can be achieved. All groups need to work together in a new way, each individually accountable for what they can do to tackle poverty.

First we need to deliver the enhanced debt relief. Last year we implemented a major reform to the HIPC initiative to deliver wider, deeper, faster debt relief. We succeeded in getting 22 countries through the HIPC decision point. However there can be no complacency. We must ensure that this relief provides countries with a lasting and sustainable exit from the burden of debt and releases adequate resources for poverty alleviation. So we are very concerned that the recent IMF and World Bank Report on Debt sustainability shows this may not be the case for some countries, and we will be addressing this vital issue at the spring meetings.

Second, we need to build the link between debt relief and poverty reduction strategies. In recent years we have seen a decisive shift away from the old consensus towards a new approach at the IMF and World Bank – demonstrated by Horst Kohler and Jim Wolfensohn’s presence at the recent London conference – in which anti-poverty policy and economic policy will in future go hand in hand, recognising that social justice and economic growth are not at odds with one another, but intertwined.

With Clare Short leading the way it is now widely agreed that anti-poverty strategies should not only be country-driven and geared to the 2015 development targets, but community owned – developed transparently with broad participation of civil society, key donors and regional institutions. And that Poverty Reduction Strategies (PRSPs) reflect the new approach. And thus that the Bank and Fund’s programmes and conditionality must support the PRSPs designed by the countries.

Third, we need to create the new conditions for permanent reductions in poverty and sustained economic development. There are two areas on which action is imperative: education and health in the world’s poorest countries.

We know that education is a precondition of progress personal and national – the very best anti-poverty strategy, the best economic development program.

The case for investing in primary education is unanswerable and remains mostly unanswered. Still, tragically, 130 million children do not attend primary school. 900 million people over the age of 15 are illiterate – one sixth of the world’s population. Public expenditure per pupil, in the 19 least developed countries, is less than $40 – compared to $200 per pupil in developing countries, and $5,300 in more advanced economies.

We must all act, individually and together. At the level of each country we can increase the resources that go to priority areas – and I am pleased to say that in the UK we have increased by £500m the amount of aid going to education.

No aid budget, and no one nation, can achieve enough on its own. And because multilateral action is essential, it is critical that we honour in action the commitment made by 180 countries at the World Forum on Education at Dakar to achieving quality basic education for all, with a special emphasis on education for girls.

And as we must act at all levels in education, we must act nationally and internationally on health.

We all know the cost, human and economic, of infectious diseases in developing countries. Diseases like AIDS, TB, and malaria each year kill eight million people, including three million children in our poorest countries: these are deaths that in many cases are avoidable, diseases that in many places are preventable.

We have a capacity to help and a moral duty to act. The pharmaceutical companies have chosen to work together with the South African Government on delivering the medicines South Africa needs, rather than confrontation in the courts. I hope this can lead to cooperation with other poor countries.

The following issues must be addressed:

• when only 10 percent of all biomedical research is devoted to 90 per cent of global disease – the diseases that overwhelmingly affect the world’s poor – we need more research and development;
• when those countries most in need are those with the least resources, we need more action to make drugs affordable;

• when the people hit hardest by disease are the people who are hardest to reach, we need to ensure drugs are distributed more effectively.

I believe this will require a new global partnership based on swift and purposeful action by governments, medical foundations, the international institutions, and developing countries themselves.

Together, strengthened by our shared commitment and resolve, we must urge the pharmaceutical companies to do more by supporting research and development and making drugs available to the poorest countries at affordable prices.

Conclusion

So in conclusion we must not only support the forward looking approach to monetary policy we have already seen by letting the automatic stabilisers operate within our fiscal rules but should renounce any resort  to protectionism by promoting new trade talks.

We must show that instead of pausing on reform we are all modernising for productivity growth in the new economy and we agree we will press ahead with  the economic reforms in Europe and Japan to which we are committed and move forward with enlargement of the EU.  And to support macroeconomic policy we should press ahead with our international financial architecture reform programme and refuse to see a downturn as an excuse for ignoring the needs of the developing countries.

Global cooperation is the answer to those who criticise globalisation today; that in a slowdown we do not turn our back on the open markets and global cooperation which have served us well; that under pressure we do not yield to the false view that international cooperation cannot yield benefits.

Indeed in answer to both those who would go it alone because of dogma and those who would attack global cooperation because they have lost faith in global institutions, we reaffirm the high ideals of 1945: a joint commitment to high levels of growth and employment and to cooperation to achieve it, an understanding that global prosperity is indivisible and conclude that it is by strengthening not weakening the institutions of global cooperation that we will best steer a course of stability, and move faster in eradicating poverty and  delivering growth and opportunity to all.

The statement made by Gordon Brown, the then Chancellor of the Exchequer, on 26 April 2001.

While this is a Treasury consultation document, I want to thank David Blunkett and Alistair Darling for their major and detailed contributions to this new plan. And I can announce that having taken 1.2 million children out of poverty the Government now propose in the next Parliament not only to take the second million children out of poverty as we proceed with our plan to abolish child poverty in a generation but now with these measures we plan to give every child the best start in life.

And today, building on the new Integrated Child Credit we plan for 2003, which will improve  weekly family incomes, the Sure Start programme and the new Children’s Fund which improve family services,  we announce two measures rooted in a new regime of  opportunities and responsibilities that improve not just family income but family wealth, giving every child a better start in life – and opening saving and wealth ownership to all.

Today 16 million people have no financial savings at all and a further 12 million have less than 1,500 pounds in savings. Indeed half of families on 15,000 pounds a year or less have no savings to their name.

To break Britain’s long term cycle of disadvantage – where children grow up poor, enter and spend their adulthood income – and asset-poor and then see their own children grow up in poverty as well –  we propose a detailed consultation on the new Child Trust Fund. The illustrative proposal is a trust fund starting at birth of 250 pounds for all children, with up to 500 for the poorest families, with further investments at 5, 11 and 16, making a minimum of 400 pounds and a maximum of 800.

With compound interest alone and modest parental contributions of 5 pounds a month, a child from a lower income family would have over 3,000 pounds in their account by age 18.

Our second proposal, a new Savings Gateway, will entrench a regime of rights matched by responsibilities:  not only interest payments on savings tax free, but a guarantee to match the savings that individuals themselves make  with matching funds coming from Government, with one proposal for consultation a pound paid for every pound saved, so making savings pay and helping those who find it hard to get on to the ladder of saving to do so and then, if they want, to move into ISAs, Stakeholder Pensions and employee share ownership, or invest in their children’s trust fund,  thus creating a democracy  where wealth ownership is genuinely open to all.

In fact, as the document illustrates, if that low income family invests some of the assets they build up from the Saving Gateway into the Child Trust Fund, they could then, with additional family contributions, produce a lump sum at maturity of over £5,000.

It is on the detailed issues of starting amounts, new  tax incentives, the uses of the trust funds, and further allowances that might be considered for example for community service  that we will now consult.

Child poverty is a scar on the soul of Britain and it is because our five year olds are our future doctors, nurses, teachers, engineers and workforce  that, for reasons not just of social justice but also of economic efficiency, we should invest in not just – as in the past – some of the potential of some of our children but invest, as we propose today, in all of the potential of all of our children.